Category Archives: Consulting

Getting Real

This Foodie Friday, I’d ask for an extra minute of your time so you can watch the commercial below.  It encapsulates our business thought perfectly:

I’d say that the spot is less about “big” food than it is about authentic food.  Real food, made with the same ingredients you’d find at home or in a farmer’s market.  It is yet another manifestation of consumers being sick and tired of lies and their desire for authenticity.  In case you hadn’t noticed, consumers are buying a set of values over a simple brand logo or image these days.   I found this quote from a marketing blog which I think states it well:

The demand for authentic marketing is a reaction from consumers based on decades of deception and deceit from organizations with slick marketing campaigns and smooth interactions with the media. From cigarette manufacturers, food producers, banking and more recently, automotive, the public has become less trusting of the messages shared by corporations. What the public really craves is this: honesty.

You might think that you don’t have this issue, but it goes beyond your products themselves.  For example, how authentic is your social media?  Are you letting the consumers do the talking in their very real voices or are you heavily editing comments?  Have you ever bought followers or likes to make your content appear popular rather than allowing your content to draw consumers to your brand?

Consumers are sick of photoshopped images, “editorial” that’s nothing more than an ad, and “astroturfed” virality.  The age of making products less expensive to produce while making consumers less safe or healthy is gone.  Maybe we ought to factor in the customer’s long-term viability as we think about “cost effectiveness” since their lifetime values certainly will decline if we shorten their lifetimes.  Do you like that notion?

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Linear Equations

I suspect that most of you had to take algebra in high school. One of the most basic things you learn is how to solve linear equations. You might have wondered, as I did at the time, how the heck is this going to prove useful other than passing an exam. As it turns out, there is quite a bit we can learn as businesspeople from them.

English: Revision of File:FuncionLineal02.svg

(Photo credit: Wikipedia)

As you recall, in order to solve for the unknown variable in one of these equations, you must isolate the variable. As you’re doing that, you also need to be cognizant of the order of operations: multiplication and division are completed before addition and subtraction. Yes, I can feel you shuddering as you recall algebra class! Here is the point, however. We need to be doing exactly that in business.

As businesspeople, we need to ask ourselves “for what are we solving?” What is our unknown variable? It’s always amazing how few managers identify specific, measurable goals. We see this in reports that puke up lots of data but which fail to identify either what impact the actions reflected in the data might have or what actions might be taken to improve the business based on the data. We need to identify the unknown variable and to solve for it.

Second, we often forget the order of operations in our businesses. How often do you hear the “ready, fire, aim” complaint? We need to identify, plan, budget and evaluate constantly, recognizing that markets are fluid and opportunities may be fleeting.  We can’t always chase the next shiny object or, at least, those which don’t fit into our business model and plan.

The flaw in my analogy today is that business is not “linear”, meaning that it’s rare that there is a straight line drawn as there must be in a linear equation.  Nevertheless, isolating the variable in order to solve for it – identifying our goals and the data which allow us to measure our progress – is critical, don’t you think?

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Retention And Acquisition

Where do you come out on the retention vs. acquisition question? What I mean is do you think it’s more of an imperative to keep your current customers happy (retention) or to keep filling the revenue pipeline with new customers (acquisition)? A study from the Forbes Insights folks says that: 

42% of respondents said that expanding their customer base was an important strategic priority for their company. And, nearly one-third of executives worldwide said that retaining their existing customer base was a priority.

This is from a study called “Mastering Revenue Lifecycle Management: Customer Engagement Leads to Competitive Advantage,” which talks about a systemic approach to maximizing revenue throughout the lifetime of the customer relationship. On the surface, this struck me as strange since I’ve always felt it was more cost effective and easier to keep an existing customer than to acquire a new one. The Ipsos folks say that I’m off base – the whole “it costs 5x more to find a new customer” is a myth.

Maybe it has to do with how “old” a company is.  The study found that more than 70 percent of respondents from mature companies believe that enhancing customer loyalty is their organization’s primary goal, as opposed 39 percent of less mature companies.  That would make sense since one would expect that the longer a company has been in business, the larger a customer base it has.

Maybe I’m just partial to the “fewer but deeper” relationships thinking, but I fall into the retention school with respect to priorities.  Let me repeat the question with which we began: where do you come out on the retention vs. acquisition question?

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Filed under Consulting, Thinking Aloud