A Letter I Received From The RAC!

On Friday I received a letter from the RAC about a new home insurance product.  But this isn’t strictly true.  I didn’t receive a letter, I opened a letter that was addressed to Mr T Test, and actually there were two letters, another one, exactly the same was addressed to Mr T O’Test.  I’m pretty sure Mr T Test and Mr T O’Test aren’t going to miss this kind of post so I opened the letter!!

At first glance I found these two letters rather amusing, but actually I think it really is rather concerning if you are any kind of stakeholder with the RAC…..

If you’re an employee it isn’t good.  Somebody who works alongside you thinks Mr T Test lived at my address, is relaxed about writing to Mr T Test, and is even relaxed about writing twice to the same address on the same day about exactly the same thing.   It’s bad news if you are a shareholder.  One contributing factor to why your dividend couldn’t be a little higher is that the RAC is investing that money into writing to Mr T Test and Mr T O’test.  It’s bad news is you’re a customer of the RAC too.  A contributing factor to why your own experience isn’t even more amazing is because money has to be set aside for writing to Mr Test rather than allocating that money to you.  Budgets have to be split between keeping customers and getting new ones like Mr Test.

Joking aside, I think this is a classic example of what happens when marketing goes wrong.  What started out as a good idea to promote a new product has in my eyes, made the RAC look rather silly and not very good at direct marketing!  If I had overall responsibility for this kind of activity I would be considering some of the following actions:-

-          I would ask the people with overall responsibility for this kind of marketing how they let this happen.  Round that table would be quite a lot of salary and overhead and some good brain power too, so I would ask why the database wasn’t simply de-duped and why isn’t there some kind of check to filter out obvious errors in the database records.

-          I would try and quantify how many Mr Tests are out there and write letters of apology to the home owners for getting their names wrong.  I would sign these personally rather than using a scanned signature.

-          I would cut all marketing expenditure budgets by 5% and increase customer acquisition targets by 2%.  If a manager told me this was not possible, I would suggest they stop writing to Mr Test as a starter for ten.  Budgets that are too big breed a culture where writing to Mr Test is OK because it doesn’t really matter and nobody will know anyway.

-          I would ask people much closer to the project detail if they really really care about the organisation and about the brand.  Somebody somewhere has let this go in the post. Why? What does this really mean about how people feel towards their employer?  It seems to me that somewhere in the process, the human passion for doing a good job has been lost and replaced with a marketing return on investment metric.  If we send out 1000 letters, x will buy the product.  But that analysis almost certainly hasn’t fully costed the Mr Test factor!

In a small business every customer matters and every penny spent matters.  There is a burning desire amongst everybody to keep the business afloat, to make it a success.  People are proud and passionate about what they do.  People try desperately hard to make everything perfect every time and get frustrated when they fall even a tiny bit short of those exacting standards  The challenge as you get bigger is to keep it that way  and some companies seem better at this than others.

I wish the RAC well with their new product. Mr Test won’t be buying home insurance from them, but hopefully someone else will and they will get a good quality product I’m sure.

Minimal Viable Product versus Minimal Viable Business Model

During this year I have been working with a small team to build a minimal viable food brand and product for testing.  I have written about this journey under the title Project FB.  Early results appears pretty good.  We learnt lots about the product, the right recipes and flavour combinations.  We tried different ingredients and different suppliers.  We learnt more about the product than just this, we learnt how to sell it, what support you need, and how it performs in a small retail environment.  All of this is very encouraging and very valuable.

But what we didn’t learn or even consider is how to produce the product at scale and how that business model might work.  I think it is fair to say we had some ideas, but we never had clarity, let alone discussions with possible resource providers to help us.  Is this good, or bad, or neither?  Perhaps we might be in a position to move with more speed now had we developed a fuller business model.  Perhaps we would have had more momentum in the business and perhaps even some positive cash flow.  We will never know.  On the flip side, we have mitigated expenditure and not spent time in areas that would possibly not ultimately get to market.  The business model has grown organically as we have learnt new things.

The learning for me is that a Minimal Viable Product may successfully validate an idea and may provide a number of insights to make the ultimate product or service better.  However, having a successful MVP is only step one.  People must understand that after this first step, there are multiple other steps to go through and that these take time.  These include supplier development, packaging development, sales development, distribution and logistics solutions.  In other words an successful MVP is the trigger to start building a robust business model.  Conceptually at first, but ultimately in the flesh.   Moving from business model concept to reality is hard, time consuming, and requires the will not to give up.

The Importance of Winning at Product Level

Brands are an essential vehicle for getting consumers to love your product and buy into your values, but they become even more valuable if the product is truly best in class too.  In the food industry a great test is to say, “if my product was tasted alongside everyone else’s without packaging or branding, would mine still come out as the best one to buy?” If so you are in a strong position, because you can still overlay a great packaging format, a great brand with strong values and recognisable packaging, a competitive price, all to add even more competitive value and differentiation.

To find out just how good your product is, it is perhaps worth considering how the brain senses may evaluate your product.  So as an example using food, get your product out on the table alongside all your competitors and ask:-

Does my product look truly more appetizing than anyone else’s?

Does the smell of my product get my taste buds more excited than the smell of any other product?

Do I win on great taste?

Is the texture and feel of my product better than the competition?

If you can answer yes to all of these you have a winning product with the potential  to be underpinned with great branding and great marketing!

Looks good, smells good. feels good, tastes good…… probably is pretty good!!

The End Of Charity

I really enjoyed reading this book.  Nic Frances shares his experiences of working for a charity and his own journey that led him to move into business development.

Although the book does not discuss the social enterprise model, it does discuss in detail the role of private companies in delivering social change and social benefits.  Nic Frances argues that it is only by encouraging private businesses to develop values and principles that are not directly linked to immediate profit that we can produce sustainable solutions to social problems.  The book describes how markets can be used as powerful enablers to deliver a range of benefits for the wider society.

The End Of Charity sets out why a charitable model is not sustainable and proposes a market led alternative which is most interesting.  It also gives some practical insights into starting a value led business from someone who has done it.

I have often looked at ways or opportunities to work with the third sector and continue to look for opportunities to give marketing and business support in this area, email me if you think we could work together!

Minority Verdict

Michael Ashcroft writes about the 2010 election.  It is a fascinating read from both political and marketing perspectives.  Obviously we know the result, a coalition government.  What is interesting is how The Conservative Party used clever direct marketing tools, database segmentation, and market segmentation to offer up the best chance of getting an overall majority.  It didn’t quite work, but they did come very close and the book explains why.  Clever segmentation can often be used to develop disproportionately high gains in market share and this is a great example of it working.

The book also shows the importance of getting the right message, in the right format, at the right time.

This book has inspired me to become more interested in the research aspects of marketing and this is something I hope to develop in 2012.

Serious Play and Open Innovation

I have spent a lot of time in the first half of 2011 looking at innovation and new product development.  Two very good books here that I should mention on my blog.

Serious Play is all about proto-typing.  It explains the importance of modelling early ideas, both by developing concepts and by developing proto-types that people can touch, explore and become excited by.  Serious Play is about how companies can use proto-typing to stimulate ideas within the company and create innovation.  Rather than think innovative teams create innovative products, this book suggests that innovative proto-types generate innovative teams and an innovation culture within the organisation.

Open Innovation is a very interesting area which is always developing.  Although this book is academically written and therefore at times hard to read, it does offer some interesting models and frame works for creating an open innovation environment.

Although not specifically about the software industry the book discusses open source software at length and highlights many examples of approaches that can transferred to other industries.  The book offers processes for using open innovation to develop solid and effective research, technology, R&D, and demonstrates the opportunity to get economies of scale within these activites.

Two great books for people trying to develop innovation within their businesses.

Proto-type Research And Testing Versus The Retail Environment

Project FB – Update.

Since my last blog post about Project FB, concerning the “lowest cost viable product” with which to go and test the market, things have been moving in a positive direction.  Our testing and proto-typing has led to changes in suppliers, improvements to our packaging, changes to pricing, and finally a set of products we have confidence will work in a retail environment.

But retail is a very different environment to the areas where most product testing takes place.  We have done all of our market testing at local markets where you pay to spend a day listening and selling to customers but other routes we could have taken include more traditional market research including focus groups, or perhaps a larger scale test targeting one market segment with a full launch and evaluation.  Whilst any method will give you answers it will also give you challenges.

We have recently been working with one retail outlet to see how our product would perform and what we needed to do to get the right rate of sale for the product to earn its place on shelf.  Here are some insights for anyone facing similar challenges.

1)      Rate of sale is the only measure that really counts.  Your product must earn its space on shelf.

2)      Having a relationship with the store manager is key.  You must make sure everyone realises where the business is on the journey, what you are trying to achieve, and why it is worth it for both parties.

3)      Make sure you have the flexibility to move your retail price – it is likely that pricing in the retail environment will need to be lower than it first appears, however do not sacrifice your premium without understanding the rationale behind any move.

4)      The hardest thing about retail is that your product is stripped bare.  You are not there to promote it, talk about it, and sell it.  You much do everything to ensure a) the packaging does that job for you, b) you can maximise any opportunities in store to get your product noticed.

Since working with one retailer we have had to reduce our price point as customers felt the product to be too expensive.  Our tests at markets would have suggested a higher price point was sustainable, but I think customers evaluation of goods changes depending on the environment they are in and the kind of shopping they are doing.  We adjusted our packaging to simplify the messages and make the flavour names clearer.  We added posters in store to get people’s attention.

All this is not enough.  We are currently looking to add a sub-set of branded messages to a shelf strip and branded tray that will house our product and give even more impact on shelf.

On a busy shelf, full of products, how does my brand and product get noticed?

Getting a product right in retail is a critical success factor but I think any business regardless of size and financial resource can only maximise the retail opportunity by first understanding what is the right mix of price and promotional mechanics to generate the best rate of sale.

Life Long Learning

It has been over two years since I finished my MBA at The University Of East Anglia.  After finishing my dissertation I decided to have a break from academic study or personal development courses because I just felt I needed one.  Then last year I did the Common Purpose Leadership and Development Matrix course which I enjoyed and found very inspiring.  I have got to the point where I need something new to stimulate my brain!  I decided at the start of the year to look into ways of embarking on a PHD programme themed in some way around one or more of the following areas – strategic marketing, branding, and partnerships, business modelling, innovation and low carbon markets, social enterprise business models and sustainability.

I have found the process of trying to understand what opportunities may be available, what further study or qualification may be required before undertaking a PHD, along with the all important ways of funding the programme, to be very difficult to navigate.  Lecturers frequently fail to reply to emails, contact telephone numbers are often difficult to find, businesses are difficult to engage, and nearly every programme seems to have its own process, criteria and deadlines with little uniformity even within universities.

I am looking for people who can help me with this challenge.  Would your business sponsor me to do a research programme / PHD, are you a lecturer or business school leader who could help me, are you involved in funding for research, are you involved in supporting people who wish to continue to learn through academic study?  What would you do in my situation.  If you can help please get in touch!

Blue Ocean Strategy

A great book for anyone who is concerned with Innovation!  It is both practical and challenging and has a similar feel to the Jim Collins books I have read. The book makes the central argument that real innovation is not about developing products that compete with competitors, but that real innovation makes the competition irrelevant because there isn’t any.  So if your next big idea for business is a new product development launch don’t confuse it with real innovation.  In my experience it is surprising how many businesses genuinely do.

The book sets out a framework for analysing where true innovation may come which I think any business could use.  It essentially focuses on increasing buyer value whilst at the same time reducing costs to deliver “value innovation”.  The book describes several strategy canvassing and definition techniques to help people understand where innovation can be developed these include the value curve, four actions framework, buyer experience cycle, buyer utility map, and blue ocean idea index which helps people to benchmark your innovation.

The book covers six key principals that facilitate this kind of innovation development:-

-          Reconstruct market boundaries to find opportunities for innovation

-          Focus on the big picture of what customers really want, not the existing numbers found in existing markets

-          Reach beyond existing demand to find new customers

-          Get the business model right and thing about the customer journey to your innovation

-          Overcome key organisational hurdles that typically stifle innovation

-          Build execution into strategy – ensure your business can execute

If you like this book, try reading Seizing The White Space as a nice complement.

Brain Rules!

We are amazing!  Every single one of us is amazing and if you don’t believe me just read Brain Rules.  Even if you forget all the other things we can do as humans our Brains alone are so incredible they make even the fastest computer with the finest most developed software look very very slow indeed.

I don’t think I need to say too much more about the book, but it does seem to me that sometimes perhaps we take our Brains for granted.  Here are the 12 principles discussed in the book and what they could mean for your business activities.

1 – Exercise boosts Brain power.  If you need to concentrate on stuff, think clearly, remain focused and remember things – the best thing you can do is exercise for 30mins upwards every day.

2 – Our Brains have evolved.  Whilst this means they can deal with the world we live in today, they also have a history which can sometimes explain what may appear to be irrational behaviour.

3 – Every Brain is completely different.  This is because our Brains configure themselves based on what we are doing.  If you want to become a faster reader – read more often – your Brain will do the rest.

4 – The Brain can only focus on one thing at a time.  That’s right, there is no multitasking!  The Brain looses attention after approximately 10 minutes at which point you must refocus it.  Think about Presentations ones you have endured and ones you have delivered.

5 – If you repeat something you increase the chance of remembering it!  Reproduce the surroundings where it first entered your Brain to increase the chances of remembering even more.  How can you incorporate this into your marketing or into your sales pitches?

6 – To commit something to long term memory introduce the information gradually and at regular intervals adding more detail at each timed interval.  What does this mean for your next strategy meeting or presentation?

7 – When you sleep your Brain organises the memories of the day.  New information is best digested before sleep rather than after.

8 – If your Brain is stressed it is because it feels not in control.  Give yourself or other people choices to reduce stress.

9 – Vision is your strongest sense.  Use imagery to increase what you and others can remember.  Powerpoint is configured to use text – but it is actually imagery that is more likely to be remembered.

10 – Smell stimulates emotions and memories at the same time for the Brain making it another very powerful sense.  How can we use this in marketing, and what does it mean for the smell of your products?

11 – Our Brains our pre-programmed for life long learning and exploration – so never stop being curious!

I am in awe of my Brain and so should you be of yours! Take a look at John Medina’s site for more information – its a great web-site and a great book http://www.brainrules.net/the-rules!