The New Reality is spawning all manner of changes in our world. Over the past thirty some years with the advent of the personal computer, for “data processing” and the internet, for “networking” and the smart phone, for “your wallet” the personal liberation revolution is in full bloom.
Since the Industrial Revolution the only manner in which a Company could “scale up productivity and profit” was by treating customers as populations instead of individuals. This has become magnified with CRM systems. Customer Relationship Management requires the use of market segmentation with became a serious exercise in the 1980’s and has become perfected since. The only way that this can be challenged is by empowering the individual.
From loyalty cards, started by service stations and oil companies in the fifties and sixties, to airline frequent flyer clubs the customer gives up their personal history every time they use a product or service. This is being turned on its head by the PC and tablets, the internet and the smart phones or PDA’s. Individuals are started to obtain the same power.
Now we see the arrival of a new thought VRM. Vendor Relationship Management where the customer truly does become “king.”
Imagine your “smart phone” where your network supplier AT&T, Sprint. T-Mobile or Verizon “lock” you up on two year contracts. That aberration in individual liberty will soon be extinct. Similarly marketeers will no longer be using words like “acquire” or “control” or manage” or “lock in” when they talk about customers. Are we the ultimate “round up?”
No with this new idea VRM the customer will regain control as if we were back to the butcher, the baker and the candlestick maker. You will shop with a PDA and be able to pass your information on to a Vendor only at your discretion. There will be implicit “contracts” of information and personal privacy. This will start more seriously as Microsoft requires the DNT (Do No Track) features will be turned on in the new Internet Explorer and that “Ad Blockers” become even more popular as with Chrome and Firefox. Ad blockers and more common in Europe today but that is fast changing.
The new marketers will have to find a new game won’t they? This new marketer will recognize the Service-Dominant aspect of their world. That relationships are a choice of a customer not the whim of a supplier. The time is now.
Change Mangement v1.3
The New Reality is spawning all manner of changes in our world. Over the past thirty some years with the advent of the personal computer, for “data processing” and the internet, for “networking” and the smart phone, for “your wallet” the personal liberation revolution is in full bloom.
Since the Industrial Revolution the only manner in which a Company could “scale up productivity and profit” was by treating customers as populations instead of individuals. This has become magnified with CRM systems. Customer Relationship Management requires the use of market segmentation with became a serious exercise in the 1980’s and has become perfected since. The only way that this can be challenged is by empowering the individual.
From loyalty cards, started by service stations and oil companies in the fifties and sixties, to airline frequent flyer clubs the customer gives up their personal history every time they use a product or service. This is being turned on its head by the PC and tablets, the internet and the smart phones or PDA’s. Individuals are started to obtain the same power.
Now we see the arrival of a new thought VRM. Vendor Relationship Management where the customer truly does become “king.”
Imagine your “smart phone” where your network supplier AT&T, Sprint. T-Mobile or Verizon “lock” you up on two year contracts. That aberration in individual liberty will soon be extinct. Similarly marketeers will no longer be using words like “acquire” or “control” or manage” or “lock in” when they talk about customers. Are we the ultimate “round up?”
No with this new idea VRM the customer will regain control as if we were back to the butcher, the baker and the candlestick maker. You will shop with a PDA and be able to pass your information on to a Vendor only at your discretion. There will be implicit “contracts” of information and personal privacy. This will start more seriously as Microsoft requires the DNT (Do No Track) features will be turned on in the new Internet Explorer and that “Ad Blockers” become even more popular as with Chrome and Firefox. Ad blockers and more common in Europe today but that is fast changing.
The new marketers will have to find a new game won’t they? This new marketer will recognize the Service-Dominant aspect of their world. That relationships are a choice of a customer not the whim of a supplier. The time is now.
WH Filosophy v1.2 Thanks Bill
Those who do not move do not notice their chains.
Rosa Luxemburg, Russian-German political theorist, economist and revolutionary
Worry about being better; bigger will take care of itself.
Gary Comer (1929–2006) American entrepreneur founder of Lands’ End
Most people … discover when it is too late that the only things one never regrets are one’s mistakes.
Oscar Wilde, Irish writer
Book of the Week
For interested people there is a wonderful little book written by Roger W. Babson in 1920 which should be required reading for everyone in High School and every politician in the land. It is called “Fundamentals of Prosperity What They Are And Whence They Come”
In 47 pages you will understand everything you need to “understand” about work, life and results. That is the first step in my progression in life. Then there is “acceptance” of what it is that you “understand” as true and necessary and finally your “commitment” to make it happen. Enjoy it. The time is now
Marketing Missiles v1.2
Service-Dominant Marketing has a series of interesting position papers in it each of which poses thought provoking concepts both past and present. Let’s look at market coverage.
We started in the equipment world with salesmen; there were rarely any women, each of whom was given a geographic territory – “These are your counties.” The salesmen then went dutifully about their work and called on customers and sold machines. The problem with this method of market coverage is that it is the salesman that determines who will be covered and who won’t. The employer doesn’t even factor into it. I know many of you will be saying that the sales manager will have something to say about that but you also know that I am right.
Pioneer Hybrid Seeds, before they were sold, radically altered the market coverage approach when they went to a customer list for market coverage. This was covered in a Harvard Business School case study in the 1990’s. They found terrific success when they focused on relationships of the salesmen and the farmers. Sales increased dramatically and the company ultimately was sold for a hefty premium as a result of their market penetration and sales results.
For some time now we have had product support salesmen as well; people selling parts and service programs and supporting the customer in their needs and wants. Unfortunately the same pattern was followed as with equipment salesmen with a small kink in the approach. The salesman was required to bring back a quotation to prove to the Company that in fact they had influenced the purchase. As you can imagine this led to all manner of tricky behavior to get paid, rewarding the Company with exactly what they were trying to avoid.
Over time the market was segmented, more on that in a future blog, and the salesmen were given specifically named customer accounts to cover. Finally we got to the point where the salesmen could concentrate on developing a relationship with their customers. The number of customers assigned was rarely more than 150 although there are exceptions with a smaller urban territory. The other factor that was taken into consideration was the number of machines. The number of machines was limited to 500 but this too had to be made smaller depending on the type of machine and the application. After all in the parts and service world the machine is the customer. Many dealers who have followed this approach, assigning customers to salesmen with limits placed on the numbers of accounts and machines are reaping terrific results. Market capture rates are higher as is customer retention. We will continue this dialogue in the next blog. The time is now.
Friday Filosophy #21
People of accomplishment rarely sat back and let things happen to them. They went out and happened to things.
Michelangelo
Ninety-nine percent of the failures come from people who have the habit of making excuses
George W. Carve
Any man may easily do harm, but not every man can do good to another
Plato
Management Musing v1.2
In the last Musing we touched on Leadership. This subject is worth pursuing a bit further. Leaders rarely are born. People become a leader – they are given the role of a leader by their team members. This is not something that is commonly believed. Many feel there is a “royal jelly” that is on some people. Well perhaps that is true sometime but in my experience it is rare. For example – some people are wonderful conversationalists in the eyes of other people at a party but typically this is the person that have listened the most. This is also true with leaders. Leaders rarely have to show off their position… they live it. They enjoy the success of their team members in fact they set the team members up to succeed.
They also become expert in their Industry. They are students of their Industry and are constantly learning. Who is growing sales and who is not? What new developments are there and where are the threats. They are constantly on the lookout for the new and the unexpected.
They are also constantly growing. They read obsessively. They are also involved in other activities from charities to schools and churches. They believe that the moment they stop growing will be the end of their leadership. You can see examples of these people in all walks of life. Are you a leader? The time is now.
Service Statements v1.2
As you look into the market capture rates for an equipment dealership in the labor market you have to consider a wide array of items. First and foremost the various types of labor that needs to be performed on construction equipment; maintenance labor, minor repair labor, replacement of wear parts or broken parts, adjustments and tune ups, and major repair and warranty labor. Each of these labor types requires a different skill set to be performed properly. Replacement of wear parts or broken lights or batteries doesn’t require a skilled journeyman to do the work. Similarly scheduled maintenance doesn’t need a “repair” journeyman either. This is where the equipment dealership has gone astray.
The equipment dealer typically has one labor rate for all of the various repair categories – one rate that covers repairs and maintenance and replacement of wear parts. That is why many customers have their own mechanics. The replacement of a tip or cutting edge requires strength not technical skills and can be done by an individual with a considerably lower labor cost than the dealer labor rate. This is also true for maintenance work. Why has the equipment dealer stuck with this one labor rate, what I call peanut butter rate, when all signs point to a loss of the low skilled labor?
I submit to you it is because the equipment dealer service managers choose to operate with all journeymen qualified technicians. This makes their life easier in a whole range of ways but that is not the purpose of the job. You need to match the skills of the technician to the needs of the job. That will allow the dealership to position their services relative to the market prices more successfully.
The only reason that the customer has their own mechanics is that the dealer has either been too expensive or not responsive enough to meet the customer needs. . The time is now.
Parts Ponderings v1.2
Last week we talked about the Equipment Parts Store – EPS. These stores were going to be modeled after the NAPA stores. They would have a pleasant instore merchandising area, a customer meet and greet area, a self-service kiosk for customers to surf the internet and place orders, a small warehouse area with fast moving common parts, a hose making operation, a small clothing and accessories area, and area with safety and environmental (green) products, everything to make a convenient and pleasant shopping experience available for the customer. The locations would be selected strategically so that they were in a good location relative to customer offices, shops and jobs.
Further in the parts business we should begin a hardware supply item service to the customers with a delivery box truck and an employee who is a sales trainee. Many of the dealers across the country use these services themselves. I find this quite astounding as in the parts department most of these items are already carried in inventory. The parts department should be in this business themselves. If an outside company can perform this function economically I don’t understand how the dealer is unable to do the same.
Then there are self-serve kiosks for select items in mini malls and other significant spots. These can be controlled by your business system and issue parts and supplies to a customer account or credit card. Have you seen these types of kiosks? They are a wonderful addition to the self-serve world we are in today.
Finally there is the option of putting inventory right on a job site. Have a mobile parts store in a 20’ container with the facility to serve a specific job. Staff it with skilled personnel and serve the customers. That would make a difference. This is about a partnership between customers and dealers that is intended to help the customer make money on their jobs while becoming more significant in the eyes of the customer in their business.
This is part of the Service-Dominant marketing we talked about in our most recent Marketing Missile. The time is now.
Marketing Missiles v1.1
Last year I was introduced to a book on marketing “The Service-Dominant Logic of Marketing” by a friend in Asia. This book is a compilation of a series of papers in academia on marketing both from a historical perspective and currently. This evolution has gone from marketing commodities to now we are in the age of marketing services and relationship are prominent as is quality. This should be right up the alley of thinking operations people.
Marketing is not some flashy sales process ort advertisement. It is not a spiffy campaign. It is about the development and maintenance of relationships in the supply chain and with the ultimate customers.
Those of us in the Product Support arena live this every day. We are trying to satisfy customers. Or delight depending on your mood. This is about the magic of the duties that our “heroes” perform every day – the people with whom the customer interacts. This is the drudge of the day to day operation. It is not sexy and at times it is hard to stay motivated. But it is akin to being married for three or four decades. You now know what love is on a very personal level. The parts and service operational personnel have to perform each and every day – with a smile in their voice and on their face and sometimes having serious difficulties; the backlog of your service work or the backorder of a critical part.
That is what Service-Dominant Marketing is all about. We will explore this together in more detail in missiles to come. The time is now.
Friday Filosophy #20
When men speak of the future, the gods laugh.
Chinese proverb
Borrow money from pessimists. They don’t expect it back.
Steven Wright
The world is but a canvas to the imagination.
Henry David Thoreau