For Enterprise Sales, nothing sells itself…

Trusted Advisor

I saw a great blog post published on the Andreessen Horowitz (A16Z) web site asking why Software as a Service offerings didn’t sell themselves here. A lot of it stems from a misunderstanding what a good salesperson does (and i’ve been blessed to work alongside many good ones throughout my career).

The most successful ones i’ve worked with tend to work there way into an organisation and to suss the challenges that the key executives are driving as key business priorities. To understand how all the levers get pulled from top to bottom of the org chart, and to put themselves in a position of “trusted advisor”. To be able to communicate ideas that align with the strategic intent, to suggest approaches that may assist, and to have references ready that demonstrate how the company the salesperson represents have solved similar challenges for other organisations. At all times, to know who the customer references and respects across their own industry.

Above all, to have a thorough and detailed execution plan (or set of checklists) that they follow to understand the people, their processes and their aspirations. That with enough situational awareness that they know who or what could positively – and negatively – affect the propensity of the customer to spend money. Not least to avoid the biggest competitor of all – an impression that “no decision” or a project stall will leave them in a more comfortable position than enacting a needed change.

When someone reaches board level, then their reference points tend to be folks in the same position at other companies. Knowing the people networks both inside and outside the company are key.

Folks who I regard as the best salespeople i’ve ever worked with tend to be straight forward, honest, well organised, articulate, planned, respectful of competitors and adept at working an org chart. And they also know when to bring in the technical people and senior management to help their engagements along.

The antithesis are the “wham bam thankyou mam”, competitors killed at all costs and incessant quoters of speeds and feeds. For those, i’d recommend reading a copy of “The Trusted Advisor” by Maister, Green and Galford.

Trust is a prize asset, and the book describes well how it is obtained and maintained in an Enterprise selling environment. Also useful to folks like me who tend to work behind the scenes to ensure salespeople succeed; it gives some excellent insight into the sort of material that your sales teams can carry into their customers and which is valued by the folks they engage with.

Being trusted and a source of unique, valuable insights is a very strong position for your salespeople to find themselves in. You owe it to them to be a great source of insights and ideas, either from your own work or curated from other sources – and to keep customers informed and happy at all costs. Simplicity sells.

11 steps to initiate a business spectacular – true story

Nuclear Bomb Mushroom

I got asked today how we grew the Microsoft Business at (then) Distributor Metrologie from £1m/month to £5m/month, at the same time doubling the margin from 1% to 2% in the thick of a price war. The sequence of events were as follows:

  1. Metrologie had the previous year bought Olivetti Software Distribution, and had moved its staff and logistics into the company’s High Wycombe base. I got asked to take over the Management of the Microsoft Business after the previous manager had left the company, and the business was bobbing along at £1m/month at 1% margins. Largest customer at the time was Dixons Stores Group, who were tracking at £600K sales per month at that stage.
  2. I was given the one purchasing person to build into a Product Manager, and one buyer. There was an existing licensing team in place.
  3. The bit I wasn’t appraised of was that the Directors had been told that the company was to be subject to a Productivity Improvement Plan, at the same time the vendor was looking to rationalise it’s UK Distributor numbers from 5 to 4. This is code for a prewarning that the expected casualty was…. us.
  4. I talked to 5 resellers and asked what issues they had dealing with any of the Microsoft distributors. The main issue was staff turnover (3 months telesales service typical!), lack of consistent/available licensing expertise and a minefield of pricing mistakes that lost everyone money.
  5. Our small team elected to use some of our Microsoft funds to get as many front line staff as possible Microsoft Sales certified. I wasn’t allowed to take anyone off the phones during the working week, but managed to get 12 people in over a two day weekend to go from zero to passing their accreditation exam. They were willing to get that badge to get them better future career prospects. A few weeks later we trained another classful on the same basis; we ended up with more Sales accredited salespeople than all the other distributors at the time.
  6. With that, when someone called in to order PCs or Servers, they were routinely asked if they wanted software with them – and found (to their delight) that they had an authoritative expert already on the line who handled the order, without surprises, first time.
  7. If you’re in a price war, you focus on two things; one is that you isolate who your key customers are, and secondly you profile the business to see which are the key products.
  8. For the key growth potential customers, we invested our Microsoft co-op funds in helping them do demand creation work; with that, they had a choice of landing an extra 10% margin stream new business dealing with us, or could get 1% lower prices from a distributor willing to sell at cost. No contest, as long as our pricing was there or thereabouts.
  9. The key benchmark products were Microsoft Windows and Microsoft Office Professional. Whenever deciding who to trade with, the first phone call was to benchmark the prices of those two part numbers, or slight variations of the same products. However, no-one watched the surrounding, less common products. So, we priced Windows and Office very tightly, but increased the selling prices by 2-3% on the less common products. The default selling price for a specific size of reseller (which mapped into which sales team looked after their account) was put on the trading platform to ensure consistency.
  10. Hand offs to the licensing team, if the business landed, were double-bubbled back to the field/internal salesperson team handling each account – so any more complex queries were handed off, handled professionally, priced and transacted without errors.
  11. We put all the measures in place, tracking the number of customers buying Microsoft software from us 1 month in 3, 2 months in 3 and every month. We routinely incented each sales team to increase the purchase frequencies in their account base on call out days, with programs that were well supported and fun in the office.

The business kept on stepping up. Still a few challenges; we at least twice got reverse ram raids, emptying returned stock back into our warehouse on day 30 of a 31 day month, making a sudden need for sales on the last trading day a bit of a white knuckle ride to offset the likely write down credit (until Microsoft could in turn return the cost to us). The same customer had, at the time, a habit of deciding not to pay it’s suppliers at month end at the end of key trading months, which is not a good thing when you’re making 1% margins assuming they’d pay you to terms.

One of the side effects of the Distribution business is that margins are thin, but volume grows aggressively – at least until you end up with a very small number of really big distributors left standing. A bit like getting wood shavings from wood on a lathe – you want just enough to peel off and the lathe turning faster and faster – but shy away from trying to be too greedy, digging the chisel in deeper and potentially seizing up the lathe.

With a business growing 40%+ per year and margins in the 1-2% range, you can’t fund the growth from retained profits. You just have to keep going back to the stock market every year, demonstrating growth that makes you look like one of the potential “last men standing”, and get another cash infusion to last until next year. And so it goes on, with the smaller distributors gradually falling away.

With the growth from £1m/month to £5m/month in 4 months – much less than the time to seek extra funds to feed the cash position to support the growth – the business started to overtrade. Vendors were very strict on terms, so it became a full time job juggling cash to keep the business flowing. Fortunately, we had magnificent credit and finance teams who, working with our resellers, allowed us the room to keep the business rolling.

With that, we were called into a meeting with the vendor to be told that we were losing the Microsoft Business, despite the big progress we’d made. I got headhunted for a role at Demon Internet, and Tracy (my Product Manager of 4 months experience) got headhunted to become Marketing Manager at a London Reseller. I stayed an extra month to complete our appeal to the vendor, but left at the end of June.

About 2 weeks into my new job, I got a call from my ex-boss to say the company’s appeal had been successful at European level, and that their Distribution Contract with the vendor was to continue. A great end to that story. The company later merged with one of the other distributors, and a cheque for £1000 arrived in the post at home for payment of stock options i’d been awarded in my last months there.

So, the basics are simple, as are the things you need to focus on if you’re ever in a price war (i’ve covered the basics in two previous blog posts, but the more advanced things are something i’d need to customise for any specific engagement). But talking to the customer, and working back to the issues delivering a good and friction free experience to them, is a great way to get things fixed. It has demonstrably worked for me every time – so far!

Urgency, Importance and the Eisenhower Box

Eisenhower Box - Urgent, Important, non-urgent, non-important

I’ve seen variations of this matrix many times, though the most extensive use witnesses was by Adrian Joseph just after he joined Trafficmaster. The real theory is that nothing should be in the urgent and important square; it’s normally a symptom of bad planning or a major unexpected (but key) surprise.

When I think back to things i’ve done that have triggered major revenue and profit spectaculars, almost all fit in the important but not urgent box; instead, the pressure to move quickly was self inflicted, based on a clarity of purpose and intensive focus to do something that made a big difference to customers. The three major ones were:

  1. Generating 36 pages of text of ideas on how to increase software sales through Digital’s Industrial Distribution Division, then the smallest software Sales “Region” at £700K/year. Having been told to go implement, I never made it past the first 3 ideas, but relentlessly executed them. It became the biggest region two years later at £6m/year.
  2. Justifying and getting funding to do the DECdirect Software Catalogue. The teams around me were fantastic, giving me bandwidth to lock myself away for long periods of absence for nearly three months to work the structure and content of the work with Bruce Stidston and his team at USP Advertising plc. That business went 0-$100m in 18 months at margins that never dipped below 89% margin.
  3. Getting the Microsoft Distribution Business at Metrologie from £1m/month to £5m/month in 4 months, in a price war, and yet doubling margins at the same time. A lot of focus on the three core needs that customers were expressing, and then relentlessly delivering against them.

The only one I recall getting into the Urgent/Important segment was a bid document for a sizable supply contract that HMSO (Her Majesty’s Stationery Office), where I was asked to provide a supplementary chapter covering Digitals’ Servers, Storage, Comms and Software products. This to be added to a comprehensive document produced by the account manager covering all the other product areas for the company. I’d duly done this in the format originally requested by her, but asked to see the rest of the document to make sure everything was covered – and that we’d left no gaps between the main document and my own – with two days to go. At which point she said she’d had no time, and had decided to no-bid the work (without telling any of us!).

The sales team really needed the revenue, so they agreed to let me disappear home for two days to build the full proposal around the work i’d done, including commercial terms, marketing plan and a summary of all the sales processes needed to execute the relationship – but just for the vendor we were accountable for. We got the document to Norwich with 30 minutes to spare. Two weeks later, we were told we’d won the business for the vendor we represented.

The lesson was to put more progress checks in as the project was unfolding, and to ensure we never got left in that position again, independent of how busy we were with other things at the same time.

With that, i’ve never really hit the urgent/important corner again – which I think is a good thing. Plenty that is important though – but forcing adherence to what Toyota term “takt time” to measure progress, and to push ourselves along.

The precise art of a low margin business

Amazon Book Warehouse

I found this great article that explains Amazons pricing strategy eloquently. It’s also the first time i’ve heard that Apple rotate their stock faster than Amazon do, which is an amazing feat for a manufacturing company. Meanwhile, it doesn’t mention Microsoft, but if you try to insert the characteristics of their business model into the picture presented, you can see why Amazon, Google and Apple have them in a head lock and are emptying the room of oxygen needed to grow. Enjoy:

http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins

What do IT Vendors/Distributors/Resellers want?

What do you want? Poster

Off the top of my head, what are the expectations of the various folks along the flow of vendor to end user of a typical IT Product or Service? I’m sure i’ve probably missed some nuances, and if so, what is missing?

Vendors

  • Provide Product and/or Services for Resale
  • Accountable for Demand Creation
  • Minimise costs at scale by compensating channels for:
    • Customer Sales Coverage and Regular Engagement of each
    • Deal Pipeline, and associated activity to increase:
      • Number of Customers
      • Range of Vendor Products/Services Sold
      • Customer Purchase Frequency
      • Product/Service Mix in line with Vendor objectives
    • Investment in skills in Vendor Products/Services
    • Associated Technical/Industry Skills useful to close vendor sales
    • Activity to ensure continued Customer Success and Service Renewals
    • Engagement in Multivendor components to round out offering
  • Establish clear objectives for Direct/Channel engagements
    • Direct Sales have place in Demand Creation, esp emerging technologies
    • Direct Sales working with Channel Partner Resources heavily encouraged
    • Direct Sales Fulfilment a no-no unless clear guidelines upfront, well understood by all
    • Avoid unnecessary channel conflict; actively discourage sharing results of reseller end user engagement history unless presence/relationship/history of third party reseller with end user decision makers (not just purchasing!) is compelling and equitable

Distributors

  • Map vendor single contracts/support terms to thousands of downstream resellers
  • Ensure the spirit and letter of Vendor trading/marketing terms are delivered downstream
  • Break Bulk (physical logistics, purchase, storage, delivery, rotation, returns)
  • Offer Credit to resellers (mindful that typically <25% of trading debt in insurable)
  • Centralised Configuration, Quotation and associated Tech Support used by resellers
  • Interface into Vendor Deal Registration Process, assist vendor forecasting
  • Assistance to vendor in provision of Accreditation Training

Resellers

  • Have Fun, Deliver Good Value to Customers, Make Predictable Profit, Survive
  • Financial Return for time invested in Customer Relationships, Staff knowledge, Skills Accreditations, own Services and institutional/process knowledge
  • Trading terms in place with vendor(s) represented and/or distributor(s) of same
  • Manage own Deal Pipeline, and associated activity to increase one or more of:
    • Number of Customers
    • Range of Vendor Products/Services Sold
    • Customer Purchase Frequency
    • Product/Service Mix in line with Vendor objectives
    • Margins
  • Assistance as needed from Vendor and/or Distributor staff
  • No financial surprises

So, what have I missed?

I do remember, in my relative youth, that as a vendor we used to work out what our own staffing needs were based on the amount of B2B revenue we wanted to achieve in each of catalogue/web sales, direct sales, VARs and through IT Distribution. If you plug in the revenue needs at the top, it gives the number of sales staff needed, then the number of support resources for every n folks at the layer before – and then the total advertising/promotion needed in each channel. It looked exactly like this:

1991 Channel Mix Ready Reckoner

Looking back at this and comparing to today, the whole IT Industry has gotten radically more efficient as time has gone by. That said, I good ready reckoner is to map in the structure/numbers of whoever you feel are the industry leader(s) in your market today, do an analogue of the channel mix they use, and see how that pans out. It will give you a basis from which to assess the sizes and productivity of your own resources – as a vendor at least!

Becoming More Efficient; Moonshot scale ideas available

 

Efficiency Straight Ahead

The statistics below are from an unashamed promotion of a new book, but I thought this was well articulated. The authors cite some statistics to think about:

Examples of Energy Inefficiency

  • The average car spends more than 95 percent of its time …. doing nothing.
  • Less than 40 percent of electrical transmission capacity is in use at any given time.
  • A calorie of beef requires 160 times more energy to produce than one of corn—and as the world grows richer, more people eat beef.
  • The cost of bringing an oil well online has more than tripled over the last decade.
  • A Motorway operating at peak throughput is less than 10 percent covered with cars.
  • Phnom Penh has a lower water leakage rate than London.

There used to be a very small detached house just inside Pamber Forest which I used to pass daily, and often wondered whether I could live quite happily in such a small place. Not quite as extreme as the Capsule Hotels you find in some areas of Japan, but a step in that direction nonetheless. This would probably mean quite a ruthless clean of the miscellaneous stuff we have all over the current house, but i’m sure there would be impressive efficiencies if we knuckled down to it.

The good thing about looking at stats like this is to start having thoughts of what Larry Page (CEO of Google) terms “Moonshots“. What could be done to improve things 10x, 100x or 1000x better than is considered normal by the rest of us, and what changes will that lead us to.

The authors feel that there’s a lot of waste in the status quo, and thus a great chance to produce and use resources much more effectively. But they don’t think it means that the sky is falling, and that our grandchildren are fated to inherit a poisoned, angry, gloomy, planet. That is also the argument of their new book, Resource Revolution: How to Capture the Biggest Business Opportunity in a Century
by McKinsey’s Stefan Heck and Matt Rogers.

My brain starts to wander at this point, and I still have this nagging feeling that all the books in my bookcase could be summarised down to 1-2pages each of people really tried – or less than 30 if examples are cited. One of the neat things about Kindle Books is that Amazon actually allow you to produce and sell stuff at that length; the The Bitcoin Primer: Risks, Opportunities, And Possibilities book
I purchased was an excellent 27 page read.

In terms of manufacturing (I guess they must be manufacturing consultants by day), they suggest looking at five areas: substitution (replacing costly, clunky, or scarce materials with cheaper, better ones); optimization (using IT to improve the production and use of resources – to order rather than into stock?); virtualization (which must really mean sweating otherwise idle assets?); circularity (finding value in products after their initial use) and waste elimination.

However, then then start citing “having to deal with more complex supply chains”, while integrating “big data” (hmmm – fad alert!) and finding diverse talent with new skills in areas like software- and system-integration (while I thought those were pretty well established!).

They conclude, “any bet that we will succumb to a global economic crisis is a bet against human ingenuity. No such bet has ever paid off.”

Looks an interesting book nonetheless, and i’m sure some good nuggets to pick at. Duly added to my Wish List.

Avoiding the strangling of your best future prospects

Escape Velocity Book Cover

I’m a big fan of the work of Geoffrey Moore, whose seminal work “Crossing the Chasm” i’ve cited before (in fact, the one page version is the #1 download from this blog). However, one of his other books is excellent if you’re faced with a very common issue in High Technology companies; having successful, large product line(s) thats suck all the life out of new, emerging businesses in the same enterprise. The book is “Escape Velocity”:

Unlike Crossing the Chasm, i’ve not yet summarised it on one sheet of A4, but have outlined the major steps on 14 slides. It sort of works like this:

The main revenue/profit engines in most organisations occur between the early and late majority consumers of the product or services; that can last a long time, denoted by the Elastic Middle:

Product Lifecycle

That said, there are normally products that sales will focus on to drive the current years Revenue and Profit targets; these routinely consume a majority of the resources available. Given a fair crack of the whip, there are normally emergent products that while not material in size today, are showing good signs of growth, and which may generate significant revenue and profits in the 1 to 3 year future. There are also likely to be some longer term punts which have yet to show promise, but which may do so in a 3 to 6 year timeframe:

3 Horizons

The chief way to categorise products/services against the relevant Product Horizon is to graph a scatter plot of revenue or profit for each line on one axis, against growth on the other (10% growth is a typical divider between the High and Low growth Quadrants):

3 Horizons to Category Power

Any products or services on Horizon 0 needs to be shielded from core resources and to be optimised to be cash generative while it lasts. The other product/service horizons are segregated and typically have a different go-to-market team (with appropriate Key Performance Indicators) assigned to each:

Focus Areas

The development pattern for Horizon 2 products are typical of the transition from “Chasm” into the “Tornado” stage on the normal Chasm lifecycle diagram. It’s a relentless learning experience, ruthlessly designing out custom services to form a standard offering for the market segments you target:

Free Resources to Context

As you execute through the various sales teams and move between financial years, there’s a lot of introspection to ensure that the focus on likely winners continues is appropriately ruthless:

Action

The sales teams driving Horizon 2 offerings should be seeking to aim high in customer organisations and drive strategies to establish a beachhead, then dominate, specific focus segments. In doing so, be mindful that a small supporting community tends to cross reference each other. Good salespeople get to know the people networks that do so, and work diligently to connect across them with their colleagues.

Trusted Advisor

The positioning of your Horizon 2 offers tend to vary depending on price and benefit; this in turn looks about like the findings from another seminal work, “The Discipline of Market Leaders”. That book suggested that really successful companies put their relentless effort into only one of three possible core competences; to be the Product Innovator, to be Customer Intimate or to be Operationally Excellent:

Benefit Sensitivity

Once you have the positioning, the Horizon 2 sales team relentlessly focus on the key people or organisations that make up their target market segment(s):

Drive to Share of Segment

The number of organisations they engage differ markedly between Enterprise (Complex) and Consumer (Volume) markets:

Target Customers

So the engagement checklist needs to address all these areas:

Target Market Initiatives

The sales team need to be able to articulate “What makes their offer different”:

Differentials

Then pick their targets:

Growing Horizon 2

Above all, be conscious who your competitors are and where you’re positioned against them:

From Whom

That’s largely it. Just a process to keep assessing the source of future revenue and profits, and ensuring you segment your sales teams to drive both this years business, and separately working on the green shoots that will provide your future. And avoiding what often happens, which is that the existing high revenue or high profit lines demand so much resources that they suffocate your future.

You can probably name a few companies that have done exactly that. Yours doesn’t need to be the next one now!

Police, Metrics and the missing comedy of the Red Beads

Deming Red Bead Experiment

I heard a report on Friday related to the Metropolitan Police possessing an internal “culture of fear” because of a “draconian” use of Performance targets, based on an interview and survey with 250 police officers. The report author went on to say that officers who missed targets were put on a “hit list”, with some facing potential misconduct action. Some of the targets were:

  • 20% arrest rate for stop and searches
  • 20% of stop and searches should be for weapons
  • 40% for neighbourhood property crime
  • 40% for drugs

and some for one policing team in 2011:

  • PCs to make one arrest and five stop and searches per shift
  • Special Constabulary officers to make one arrest per month and perform 5 stop and searches per shift
  • Police Community Support Officers (PCSOs) to make five stop-and-accounts per shift, and two criminal reports per shift

But Metropolitan Police Assistant Commissioner accused the reports authors of “sensationalising” the issue. He also then said something that threw the red flag up in my simple brain – that “it was the Met’s job to bring down crime“. Then said that since it had a “more accountable way of doing things”, rates were down by nearly 10%”.

One officer told the report: “Every month we are named and shamed with a league table by our supervisors, which does seem very bullying/overbearing.”

Another officer refers to a “bullying-type culture”.

The report says: “There is evidence of a persistent and growing culture of fear spawned by the vigorous and often draconian application of performance targets, with many officers reporting that they feel almost constantly under threat of being blamed and subsequently punished for failing to hit targets.”

But Scotland Yard denied officers were being unfairly pressurised. In a statement, the force said it was faced with many challenges, but insisted it did not have a bullying culture.”We make no excuses for having a culture that values performance,” it said.

“We have pledged to reduce crime, increase confidence and cut costs. It’s a big task and we have a robust framework in place to ensure we achieve this. The public expects no less.”

A source of confusion here

I thought that the “it was the Mets job to bring down crime” comment was a very curious thing to say, not least that I traced it’s origin to his ultimate boss, the Home Secretary, who also said the only Police metric important to her was that of reducing crime.

Think about that for a moment. Does the Police have total control to dictate the crime rate? I wouldn’t dispute they have some behavioral, presence and advisory influences, but in the final analysis, there are many external influences (outside their control) that i’d suspect have a much greater impact on that measure. With that, you’re entering into a world where your main control at your disposal – that of diligently recording the statistics to back up a political narrative – is wide open to wholesale abuse.

Meanwhile in Bristol

The private sector is far from immune also. At one stage earlier in my career, I worked out of a company branch office in Bristol, serving IT customers in the South West UK. For the most part, we were very matter of fact, honest and straightforward with customers. And then came the annual customer satisfaction survey, a multiple choice questionnaire sent to the IT Managers at most of the key customers we dealt with in our work.

I remember being in an office with the IT Manager at Camborne School of Mines (we had a big VAX doing scientific work, supporting their drilling for warm underground water as a potential future energy source). The customer satisfaction survey was sitting open on his desk, with the page showing his yet to be filled in customer satisfaction measure for quality of Field Service Maintenance. In walks the Field Service engineer who’d just arrived, said “Hello, i’m here” around the door, and was called back by the IT Manager. The Manager then held the tip of his pen over the 1-10 rating boxes on the survey, and said “When can we have the new disk drive that arrived yesterday installed?”. Field Service engineer said “Is next Wednesday okay?”. Pen moves over to the 1/10 Customer Sat box. “Eh, I can probably do it just after lunchtime today!”. Pen moves over the 10/10 box. “Yes, you’ll have everything working this afternoon”. With that, the 10/10 box was ticked. A wry smile from everyone, and a thought that if genuine feedback was sent back by customers in general, it would result in service improvements that benefitted the company.

As it turns out, very naive on our part.

A missive rolled down from the European HQ in Geneva that said our office was the 3rd worst office for customer satisfaction in Europe, and hence someone in the office would be nominated to enact changes to improve performance for next year – with serious consequences if big improvements weren’t delivered. And with that, the European President said – to all 30,000 staff in Europe – is that the minimum acceptable performance next year would be an overall 8/10.

So, what happened? The guy in the office nominated to manage the transition to high quality (wry smile here) was the same guy who did the large scale benchmarking exercises for prospective customers against competitors of that time. Where the main skill was politically getting things coded into the customers benchmarking spec handed out to every vendor that suited the performance characteristics of our own machines, and in generally playing whatever games he could to win on key measures on which the bidding competition would be judged.

Customers known to be unhappy magically disappeared from the survey mailing list. Anyone visiting customers routinely in their working week were trained on how to set customer expectations that anything under 9/10 was deemed a failure, and that 10/10 was a norm. And everyone knew who was going to get a survey, and worked doubly hard to ensure those customers were as happy as we could make them – with the minimum marking scores in mind. Several thought of it no more than one week when they had more blackmail capital than at any other time of the year, but otherwise complied with the expressed wishes.

End result: Top office in customer satisfaction in the country, and only 3rd among all the branches in Europe (1 and 2 in Austria – suspicious that, but hey).

Were customers any happier? No. Was the survey a useful improvement device? No. Did it suit the back story for the political narrative? You bet! And with that the years continued to roll on.

My own Lightbulb moment

Somewhere along the line between Bristol and more senior roles in the same company, I came upon one W Edwards Deming, and one thing he routinely did to managers to fix this sort of malaise. But a slight detour first (based on what I did after that following my experiencing one of his lessons).

Doing things right (I think)

When I was Director of Merchandising and Operations at Computacenter’s Software Business Unit, the internal Licensing Desk reported into me; a team of five people who dispensed advice about how to buy software in the most cost effective way possible without unwanted surprises. And administering all the large license orders with vendors in support of this. A super team, managed by Claire Hallissey.

Claire had one member of her team consolidating data collection on the number of calls coming into the team and how long each enquiry was taking to handle; not something i’d imposed on the team at all, but I suspect for her own management use. It became pretty obvious from the graphs that growth in demand to use her team was far outpacing the revenue growth of the Business Unit, at a time when we were likely to be under pressure not to increase headcount.

So, what did we do? I indicated that the data collection was brilliant, and didn’t want to see effort or accuracy of that compromised in any way. However, if they managed to work out any way of reducing the volume and length of calls into her team by 15% by the next quarter end, i’d put a £150 bonus in each of their pay packets. The thinking here is that they were the folks who could ask “why” most effectively, and enact changes – be it local office new sales support hire training, simplifying documentation, and generally tracing back why people were calling in the first place. And then relentless putting their corrective actions into play.

In the event, they got overall call volume down by 25%, the source data quality stood up to my light scrutiny, and all duly got the £150 bonus each – plus senior accolades for that achievement. One of the innovations was adding a sentence or two to standard template response emails they’d built to answer common secondary questions too – and hence to take out repeat calls with better content in the first email answer sent back. With that, the work volume growth trailed the sales volume increases, and the group more productive – and less bored by the same repeat questions, ad nauseum.

Then in Southend

Likewise on day 2 of my job at Demon Internet, when a group of us walked into the Southend Tech Support Centre to see a maxed out floor of people on the phones to customers, and a classroom with 10 new recruits being trained. The Support Centre manager, looking very harassed, just said “that’s this weeks intake. We’ve got another 10 next week, and another 10 the week after that”. I think I completely threw him when I said nonchalantly “But why are customers calling in?”. He just looked at me as if i’d asked a very stupid question, and replied “We just haven’t got enough staff to handle the phone calls”.

Fortunately, his deputy was able to give us a dump of their Remedy system, so a couple of us could sample the call reasons and what specifically was requiring technical assistance. In the event, 27% of the calls related to setting up the various TCP/IP settings; we then changed the product and simplified it’s supporting documentation to work those issues away. At least some respite until Microsoft shipped Internet Explorer 6, which resulted in the Customer Services Director admitting later as having “fundamentally broken my call centre”. But that’s another story.

W Edwards Deming

W Edwards Deming Quote

But back to metrics. The one thing in all my career that made my light bulb go on related to measures and metrics was an experiment conducted by W Edwards Deming. Deming was an American statistician who was sent to Japan after World War 2 to assist in it’s reconstruction, and found himself teaching motorcycle and car manufacturers on how to improve the quality of their products. As quality improved, they also found prices went down, and companies like Honda, Suzuki, Kawasaki, Datsun (now Nissan) and Toyota went from local to worldwide attention with motorcycles, then cars. The products from which, unlike their western counterparts, rarely broke down and remained inexpensive – so much so, western governments instituted quotas to arrest the siege on their own manufacturing industries. To this day, the highest accolade for excellence of quality in Japan remains “The Deming Prize”. It was only much later that the work of Deming was widely acknowledged, and then used, by western manufacturers as well.

During his training seminars, Deming conducts what is known as “The Red Bead” experiment. Unfortunately, the comedy of promoting good workers, firing underperformers, and urging improved performance with no control over the components of a process is largely lost in videos of him running this himself, given that he was well into his 90’s when recorded. His dry humour is a bit harder to spot than it would have been earlier in his career – when he openly acknowledged that some Japanese managers routinely imposed the same class of bad metrics on their staff as those of the worst examples he found in the West.

If you can buy a copy of his seminal book Out of the Crisis, you can see the full description between pages 109-112, in Chapter 3, “Diseases and Obstacles”, following the subtitle “Fair Rating is impossible”. Something the Home Secretary, and all echelons of Managers in the Public Sector, should read and internalise. If they did, I think the general public would be pleased with the changes i’m sure they’d enact based on his wise knowledge.

In the absence of an original Deming version, a more basic version of the same “your job security depends on things outside your control” sentiments can be found on this (it’s around 2 minutes long):

or a longer 24 minute version, truer to the original real McCoy:

A modern take on peoples valiant attempts to get attention

Facebook Newsfeed Algorithm Equation

A really well written story in Techcrunch today, which relates the ever increasing difficulty of getting a message you publish in front of people you know. Well worth a read if you have a spare 5 minutes: http://techcrunch.com/2014/04/03/the-filtered-feed-problem/

The main surprise for me is that if you “Like” a particular vendors Facebook page, the best historical chance (from Feb 2012) of seeing one individual post from them was around 1 in 6 – 16%. With an increase in potential traffic to go into your personal news feed, it is (in March 2014) now down to 1 in 15 – 6.51%. So, businesses are facing the same challenges to that of the Advertising industry in general, even on these new platforms.

Despite the sheer amount of signal data available to them, even folks like Facebook (and I guess the same is true of Google, Twitter, LinkedIn, Pinterest, etc) have a big challenge to separate what we value seeing, and what we skip by. Even why we look at these social media sites can be interpreted in many different ways from the get go. One of my ex-work colleagues, at a s Senior Management program at Harvard, had a professor saying that males were on Facebook for the eye candy, and females to one-plus their looks and social life among their social circle (and had a habit of publishing less flattering pictures of other women in the same!).

The challenge of these sites is one of the few true need for “big data” analyses that isn’t just IT industry hype to sell more kit. Their own future depends on getting a rich vein of signals from users they act as a content platform for, while feeding paid content into the stream that advertisers are willing to subvert in their favo(u)r  – which is a centuries old pursuit and nothing remarkable, nor new.

Over the past few weeks, i’ve increased the number of times per week I go out for a walk with my wife. This week, Google Now on my Nexus 5 flashed this up:

Google Now Walking Stats Screenshot

 

So, it knows i’m walking, and how far! I guess this isn’t unusual. I know that the complete stock of photographs people upload also contain location data (deduced from GPS or the SSID of Wireless routers close by), date/time and readily admit the make and model of the device that it was taken on. And if you have a professional DSLR camera, often with the serial number of the camera and lens on board (hence some organisations offering to trace stolen cameras by looking at the EXIF data in uploaded photographs).

Individually identifiable data like that is not inserted by any of the popular mobile phones (to the best of my knowledge), and besides, most social media sites strip the EXIF data out of pictures they display publicly anyway. You’d need a warrant to request a search of that sort of data from the social media company, case by case. That said, Facebook and their ilk do have access to the data, and also a fair guess at your social circle given who gets tagged in your pictures!

Traditional media will instead trot out statistics on OTS (aka “Opportunities to see” an advert) and be able to supply some basic demographics – gleaned from subscriptions and competition entries – to work out the typical demographics of their audience you can pay to address. Getting “likely purchase intent” signals is much, much more difficult.

Love At First Website Demon Ad

When doing advertising for Demon Internet, we used to ask the person calling up for a trial CD some basic questions about where they’d seen the advert that led them to contact us. Knowing the media used, and it’s placement cost, we could in time measure the cost per customer acquired and work to keep that as low as possible. We routinely shared that data every week with our external media buyers, who used the data as part of their advertising space buying negotiation patter, and could relate back which positions and advert sizes in each publication pulled the best response.

The main gotcha is that if you ask, you may not get an accurate answer from the customer, or you can be undone by your own staff misattributing the call. We noticed this when we were planning to do a small trial some TV advertising, so had “TV” put on the response systems menu – as it happens, it appeared as the first option on the list. We were somewhat bemused after a week that TV was our best source of new customers – but before any of our ads had been aired. So, a little nudge to our phone staff to please be more accurate, while we changed every ad, for each different media title we used, to different 0800 numbers – and could hence take the response readings off the switch, cutting out the question and generally making the initial customer experience a bit more friction free.

With that, our cost per acquired customer stayed around the £20 each mark, and cost per long term retained customer kept at around £30 (we found, along the way, some publications had high response rates, but high churn rates to go with them).

Demon Trial Postmark

The best response rates of all were getting the Royal Mail franking machines to cancel stamps on half of all stamped letters in the UK for two two-week periods – which came out at £7 per acquired customer; a great result for Michelle Laufer, who followed up when she noticed letters arriving at home cancelled with “Have a Break, Have a Kit Kat”. Unfortunately, the Royal Mail stopped allowing ads to be done in this way, probably in the knowledge that seeing “Demon Internet” on letters resulted in a few complaints from people and places with a nervous disposition (one Mental Hospital as a case in point).

The main challenge for people carrying a Marketing job title these days is to be relentless on their testing, so they can measure – with whatever signals they can collect – what works, what doesn’t and what (from two alternative different treatments) pulls better. Unfortunately, many such departments are littered with people with no wherewithal beyond “please get this mailer out”. Poorest of Amateur behaviour, and wasting money unnecessarily for their shareholders.

As in most walks in life, those that try slightly harder get a much greater proportion of the resulting spoils for their organisation. And that is why seminal books like “Commonsense Direct and Digital Marketing“, and indeed folks like Google, Facebook et al, are anal about the thoroughness of testing everything they do.

Treating Employees right – or how to freak your Manager out!

Joker Playing Card

I’ve always been impressed with the output of Scott Adams and his Dilbert books. He did a sterling job in two of his books after reviewing the stupidity that happens in offices around the world, but then asked the intelligent questions. Like, if what it says in your Job Plan or your Personal Objectives is so bad, what would one that did things properly look like?

One of the gold nuggets in the appendix of one of his books was what he termed the “Out at 5” or “OA5” plan. At one fairly young company down my career, I employed two recently minted Marketing Graduates. In the absence of any template used by the company at that stage, I stole the theme completely – and the result is below.

When I moved to be a Director of the Software Business Unit at Computacenter, I asked my boss if she was okay with me using the same form of OA5 plan for all my employees there. She read one and sort of freaked out. I understood her concern after she explained her nervousness: that people would take advantage of the words literally, albeit my experience was that people followed the spirit of it instead – and worked hard regardless. So, in that instance, I filed it away and used the Corporate standard process in place instead.

I nevertheless executed using its sentiments – and ensured that if there was a vendor conference in the USA, it was my newly minted Product Managers that went on behalf of the team (they after all needed the context to explain how developments fitted in with future product roadmaps – better they know and impress people with their authoritative knowledge, rather than having to defer to me all the time). They always grew in stature very fast by being thrown in at the deep end (albeit with a safety rope to tug on if ever needed), and were a joy to see blossom into key employees of the future.

Pity I couldn’t put things in writing though. I found some of the same sentiments in the excellent ROWE (Results Orientated Work Environment) Books, though explicitly offering clock off time to go to the cinema mid afternoon, or to work remotely for an extended period of time, would have been a tougher management sell at the time. That said, I always found everyone enjoyed their work more with the below in place. This is a real plan, bar names and dates removed to protect the innocent!

OA5 Plan: (Employee Name)

You will sometimes find yourself surrounded by people who have different goals to you, who will unknowingly do things that undermine your projects, or that generally behave outside the best interests of (Company Name). Your task is to rise above this, and despite all obstacles, deliver:

  • 180,000 subscribers by the end of (date)
  • Complete the National Advertising for (4 month date span), including the test of a radio campaign
  • Complete the Corporate Brochure, Welcome Packs and other tasks that we mutually agree that you should execute
  • Full participation as a member of the Marketing Services Team
  • Help your Manager put together a spend plan for the new financial year starting (date)
  • Tests of everything you do. It’s a much safer world if we get to know what works, what doesn’t, and that we’ve learnt. Within the bounds of experimental exercises, we should strive for continuous improvement

Functions of your Manager

In support of the above goals, your Manager will assist in the following ways:

  1. Eliminating Assholes. If anyone or anything is standing in the way of you meeting your objectives, please seek assistance to get the obstacle cleared. It is his role to absorb uncertainty and to provide an environment where you can deliver your projects unhindered. We want you to enjoy your work and be proud of your achievements.
  2. Your manager will do his best to provide an environment where you are learning (and helping the company learn) every day. Requests for training are welcome. Sharing of ideas and distribution of your learnings to your Manager and your colleagues, ideally in small digestible chunks, is encouraged. And you are expected to make mistakes; that’s the way we all learn.
  3. Seek forgiveness, not permission. In the same way you can escalate issues to your Manager, there will be times when the data, or key staff, aren’t available for us to hit a key decision deadline. Time to market is key; having weighed up the pros and cons, make the decision that you believe is right for the company, our customers, and preferably both.
  4. Building your Personal Network. It’s often a case of who you know; contact with suppliers, customers and other departments in (Company) is actively encouraged. Please keep details of everyone you talk to, and don’t be afraid to seek advice from anyone with pertinent experience that you deem appropriate. The strength of your Personal Network – particularly outside the company – should build to be a significant personal asset.
  5. Timekeeping and Attendance. We wish to provide an environment where you can discharge your commitments between 9:00am and 5:30pm. If there are times when you prefer to work from home, or from another location, please let us know your whereabouts so we can find you if needed. Should you work extended hours (attending press announcements or any work related activity outside hours), you may take this time off in lieu; again, please let us know so we can correctly set expectations of anyone that asks for you.
  6. No Retribution. Your Manager is available to help in any way, at any time, day or night. However, if anything concerns you in any way, you are free to talk to (Manager’s Manager name), any other Director, or the Personnel Department directly.

Manager: Ian Waring
Office: (office direct dial phone number)
Mobile: (work mobile phone number)
Home: (Home phone number)
Email: (Work email address) or (Home email address)