Tuesday, September 19, 2017

New Business Development for Selling Professional Solutions



A short story to illustrate Principles of New Business Development for Selling Professional Business Solutions

Once upon a time, a mother and her school-going daughter went to the marketplace to buy oranges.  
At the marketplace, they saw 4 shops selling oranges. 

  • The first shop was called LOW COST.  This shop had black-board with a chalk message that read, “CHEAPEST ORANGES SOLD HERE!

  • The second shop was called CREDENTIALS.  This shop had a flashing neon signboard with a long list of all the fancy equipment they used to harvest the oranges and to pack and transport the oranges to the shop.

  • The third shop was called CLIENT LIST.  This shop had a big bill-board at the entrance with photographs of a number of pretty Bollywood actresses!  The bill-board read, “BOLLYWOOD ACTRESSES BUY THEIR ORANGES FROM HERE - SO SHOULD YOU!”

  • The fourth shop was called EMPATHY.  This shop had a neatly designed message board that read, “FOR FREE CONSULTATION ON HOW ORANGES CAN MAKE YOU HAPPY, WALK IN NOW!”

Mom was obviously intrigued.  She had a limited budget but did not want to risk buying bad oranges at the LOW COST shop. “Why else, would someone sell at low cost?” she wondered.

She was quite intimidated with all the fancy equipment described at the second shop.  Frankly, she didn’t understand half of the list.  And wasn’t sure if this would help her buy tasty, healthy oranges.   

She didn’t want to appear dumb by asking too much about what she didn’t understand so she decided not to walk into CREDENTIALS. 

The Bollywood actresses’ pictures at the third shop looked gorgeous! She was quite tempted to walk into store CLIENT LIST.  Perhaps the oranges in shop 3 were organic and healthy which is why all the Bollywood actresses went there and looked so good!  

But then the invitation of a free-consultation at shop 4 was tempting.  So she walked in, intrigued, to find out how oranges could make her happy.  She decided she would take a quick look at shop EMPATHY and then perhaps go back to shop CLIENT LIST and buy her oranges.

In shop number 4 called EMPATHY, she found a number of options neatly laid out in counters.  The first counter had a jolly old man demonstrating how a simple juice extractor could serve up a fresh glass of orange juice.  Just adjacent to that was another counter manned by a short, stout lady who exuded so much energy!  She was efficiently taking the orange rinds left over from the orange juice counter and demonstrating how to make marmalade and jams from the rind of the orange.  A bunch of happy teenagers, keen to learn seemed to be enjoying the demonstration.  A third counter was manned by this pimpled boy who neatly pealed the oranges, removed the seeds and put them in small boxes with a toothpick making for an easy snack.  And right beside this boy was another counter serving orange ice-cream with scores of recipe books on how to make sorbets and ice-creams.  And guess what? A pretty Bollywood actress was actually standing there licking an ice-cream at the counter too!  Guess some actresses came to EMPATHY too and relished oranges and orange ice-cream!

The lady noticed her daughter skipping lightly to the light-hearted music playing in the store as a well-dressed man called Mr. NBD walked up to them and began describing the wonderful ways in which oranges could share happiness with all.  He then attentively listened to why the lady wanted to buy oranges.  The woman explained how she was looking to buy them to prepare fresh juice for her family at breakfast. 

The well-dressed man suggested that she should then consider the Valencia variety which was sweet and ideal for breakfast juice. In fact, he suggested that she should use a metal juicer (vs. plastic which is not good for health). 

He then also added that ideally, the lady should consider serving some orange fruit for breakfast on alternate days since the fruit has a lot of fiber that the juice misses out on.  The woman found that very informative.  She knew orange juice has vitamin C, but did not realize the fiber had such health benefits.

The man also described how the woman could actually save some money and enhance her family’s health – by making her own fresh marmalade and jams at home as opposed to buying expensive jams from supermarkets (which are loaded with preservatives to increase shelf life).  “Sodium benzoate is used liberally in bottled jams and that can play havoc on your health you know! On the other hand, fresh orange rind is awesome for you!” he explained.  “The leftover rind from the orange juice can easily be used.”  He wisely pointed to the mother to observe how the short stout lady expertly made the fresh jams and marmalade.  The mother watched with rapt attention as did her daughter.

The recipes looked simple and the book would pay for itself in less than a month the mother figured.  Besides, her daughter may have fun trying to make Jam!

In about half an hour, the lady walked out of EMPATHY STORE with a bagful of oranges, two boxes of freshly pealed fruit with the fibre for the next day’s breakfast, and a recipe book for making jams and marmalade.  She had also taken Mr. NBD’s telephone number to ask him for help if she got stuck when making the marmalade.

Moral of the Story:
Most of us tend to sell solutions predominantly using either or all of 3 C’s – Credentials, Client List or (low) Cost.  These are important, but not sufficient.  They at best demonstrate technical competence. The 4th C in solution selling is the most critical – (instilling) Confidence.  The buyer must believe that she can trust you with not just her fees, but also her reputation.   And that your input is not from a self-serving need to “sell” but a sincere attempt to “help.”  This is so obvious because typically most professional sales have financial and business impacts  several times larger than the fees involved. 

A sincere attempt to help is not possible without investing the time to comprehend the problem at hand, helping the client think through proposed options and then suggesting a solution that reduces uncertainty for the client.  

Closing the sale once both competence and trust are established... is merely a formality!

Sunday, August 3, 2014

National Governance (Over) simplified



There once was a King called Governance.
He had three sons:

  1. Son one was called Capitalist
  2. Son two was called Socialist
  3. Son three was called Pluralist

The king wanted to find a successor to rule his kingdom called World after him.  So he called his three sons and posed them a riddle.

The riddle was this:

3 men are lost in a desert. They are 2 days away from the nearest oasis.  They have only one can of water. 

  • Man one is called Weak - He is so weak that even if he drinks the one can of water, 50% chances are he will die before he makes it to the oasis.
  • Man two is called Average - If he drinks the one can of water, he has a 75% chance of surviving the two day journey to the oasis.  However, a 25% chance he could still die of exhaustion and thirst.
  • Man three is called Strong. He has a 50% chance of surviving the 2 day journey and making it alive to the oasis, even if he has no water.  However, 50% chances are he will die in those two days.  On the other hand, if he consumes the can of water, there is almost a 100% chance he will complete the 2-day journey to the oasis, alive and fit. 
The wise king asked each one of his sons, "If you could choose, whom would you give the water can to?"

Son Capitalist was very logical and clever.  He was the first to answer, "Both Weak and Average could die even if they consume the can of water.  And so could Strong without any water. So I would give the water can to the Strong.  Better to save at least one life with 100% guarantee than risk all three with no certainty!"

Son Socialist was kind-hearted.  He said, "Life is a gift from God. And hope is all we have.  So I would try to keep as many people alive for as long as I can.  Who knows?  Some help could come along the next morning, and by then we would have let one person die, is that even acceptable?"

"I would give the water to the weakest man.  At least that way, we know all three will most likely remain alive till the next morning.  And with some luck, help will come in time and ensure all 3 continue to remain alive.  It is wrong to favour the strong against the weak. My duty as ruler would be to be a safety net for the weakest."

The third son, Pluralist was quiet and in thought.

When the king looked at him, he humbly began, "Obviously any choices we make will be imperfect. And will result in death.” 

“But as human beings, are we in it only to survive?  Do morality, intelligence and creativity have no play here?”

Everybody was now listening to him.

“In my view, water is a common wealth of all three citizens,” Pluralist continued, “So I would consult with all 3 men and ask them if the following would work:

Let half the can of water be given to Strong.  BUT ONLY UPON the condition that he will carry WEAK on his back on the journey to the oasis.”

“Of the balance half can, I would divide it equally among the other 2 men - Average and Weak"
"What would you achieve by that?" asked his brother Socialist.

"A number of things," continued Pluralist.

  1. Everybody gets water - it’s a common resource that everybody has a right to 
  2. With more water comes more responsibility - so I would give more to Strong with the responsibility of helping the Weak
  3. I foster a bonding and mutual responsibility for life and survival among all 3 men
"But what if they all die anyways?" asked Capitalist.

"We will all die one day brother," said Pluralist.  
"With this formula, everybody will certainly have a higher chance of surviving as a community as opposed to as individuals.  Moreover, even if they die eventually, they will die with honour and probably with happiness.” 

”Isn't that what life is all about anyways?"

Everybody was quiet.

The king was not sure whom to handover Kingdom world to.  So he divided his kingdom into three provinces.

  • His eldest son, Capitalist, he handed over America
  • His second son, Socialist, he handed over India
  • His youngest son Pluralist, he handed over Canada
(the purpose of this fictitious story is only to provoke thinking and reflection as opposed to making any judgements about any country or political systems)

Monday, March 10, 2014

Social Entrepreneurship



CHAPTER ONE: Introduction to the Village of Darsanapur

A long time ago, there was a tiny village in India called Darsanapur. 
Darsanapur had a very sad socio-economic make-up. 
There was one very rich landlord who owned all the fields in and around the village.  And the village had about one hundred-odd families of landless labourers who toiled hard in these fields from sunrise to sundown to make a pittance wage from the landlord.
Every day, the labourers toiled hard in the fields to make a minimum wage.  This wage just about allowed them to make ends meet, with no savings.  Many of them could not even eat a daily meal, since the wages they earned were so little, that any other unplanned expense such as sickness or travel left them with no alternative but to skip their mid-day meal.
Now in this village was a small temple in that was managed by a very good-hearted pujari (priest).  Every day, after completing his daily puja (prayers), the pujari walked for several hours to neighbouring villages to beg for alms and food.  Most of what he collected, he brought back and took to the fields to share with some poor farmer who was going hungry.
This routine had been going on for a few years.


CHAPTER TWO: A Visitor

One day, a rich trading merchant moved into the village of Darsanapur.  This merchant was a shrewd businessman who had earned his wealth through hard work and entrepreneurship. He built a big house close to the temple.
The pujari thought he should try his luck and went to beg for alms at the merchant’s house. 
The merchant was a good man and gave the pujari some food in alms. 
The pujari promptly took the food to some hungry farmers in the field.  Within a short while, he was back at the merchant’s house to beg for more.  The merchant was puzzled at first but did not want to offend the pujari so he gave the pujari some more food.  Sure enough, the pujari distributed this additional food to some other hungry farmers and was back at the merchant’s house in no time to ask for more.  The puzzled merchant then asked the pujari why it was that he kept asking for food.  Did he just have a large appetite?
The disheartened pujari then told the merchant all about how there was this one rich landlord in Darsanapur and how he paid only pittance as wage to the landless farmers.  The pujari also described how he walked for several hours every day to get food for them from neighbouring villages. 
The merchant carefully heard all about the pujari’s hard work to collect enough food for the helpless landless farmers of Darsanapur.
Then the merchant gave the pujari ten coins and said, “Go buy a big tiffin box.  So that when you come the next time, you can carry enough food for your friends and you don’t have to walk back and forth from the fields in this scorching sun.”  The pujari gratefully took the ten coins from the merchant. 
The next day, the pujari was back at the merchant’s house begging for alms and food for himself and for the landless farmers.  The merchant asked him for the tiffin box so that he could give him enough food for all.
However, the pujari said, “Dear merchant, forgive me but I did not buy the tiffin box.”  “The pain of seeing hungry farmers was too great for me.  So instead I spent the ten coins on buying fruit and distributed the fruit among farmers for their families.  My heart yearns for them and I could not bring myself to spend money on anything other than on fruit for the poor families.”
The merchant was quiet.  He was thinking hard but did not share his thoughts with the pujari.
He quietly gave the pujari as much food as the pujari could carry and then sent him off on his way.  In a short while, the pujari came back for more food to the merchant’s house.  But found the house locked.  The pujari was shocked and angry! How could the merchant go away?  Didn’t he know that there were so many hungry farmers who could benefit from alms?  In his heart of heart, he could not help but curse the merchant for having deserted the poor farmers.


CHAPTER THREE: The Tour

The merchant had actually not gone away.  He had locked his house in rage that the pujari had violated his trust and not bought the tiffin box with the money.  The merchant was in a shed in his backyard.  He was packing clothes, some supplies and some material for trade for a long tour. 
Early the next morning, the merchant took off in his horse-cart and began a tour that would take him several months to complete.  This tour involved a visit to 30 towns that were close to the village of Darsanapur.
At each town that the merchant went to, he first contacted some of the wealthiest traders and either sold them some goods or purchased some merchandize from them.  This allowed him to make friends with them.  He then would describe to them the plight of the villagers of Darsanapur and asked for their help. Over the months of his travel, within each of the 30 towns the merchant visited, he established trading partners who:

  1. Agreed to trade with him regularly
  2. Agreed to put aside a share of the profits to fund one cartload of food once a month for the poor farmers of Darsanapur.

After about 3 months of this exhausting but profitable tour, the merchant returned back to Darsanapur.  By now, he had a donor committed to supplying food for each day of the month in addition some profitable trade deals.  It was late in the evening when the merchant returned back to Darsanapur.


CHAPTER FOUR: The Return

The next morning, the merchant went to the fields. The landless farmers were quite surprised to see this well-dressed man in the scorching sun. 
The merchant told them of his plans.  “I will ensure that all of you have enough food for lunch every day.  However, I need to have 3 men every-day who will ride to the town I tell you in my horse-cart.  They will then ride back with 2 carts of goods for me and one cart full of food for the village.”
The farmers readily agreed.  Giving up one day of labour was a small price to pay for 3 men to get lunch for all hundred farmers.  The merchant was happy too that he was getting free help to transport his goods – which meant more profit. 
And so it came to pass.  Every day, 3 labourers would ride the merchant’s horse-cart to one of the towns and carry back two carts of goods and one cart of food to Darsanapur.  And the farmers feasted on a hearty lunch every day in the fields.
Everybody was happy!  The farmers for the food, the traders from the neighbouring villages for the business and profits, the merchant for being able to get free labour and a profitable business.  In fact, the landlord was happy too!  The merchant had started buying the produce from the farm and using his newly created transport organization was able to sell farm produce from Darsanapur to the 30 neighbouring towns for higher profits.  This allowed the landlord to make a little more money than he used to in the past. Well, almost everybody was happy – not the pujari.
The pujari was very angry at the merchant.  In the pujari’s view, the merchant was exploiting the poor farmers for personal profit. 
“How dare the merchant ask the farmers to transport his goods for free despite being so wealthy?” thought the pujari to himself.  “And how dare the merchant exploit the charity of his trading partners for personal benefit.  This was so immoral!  Surely the merchant would rot in hell,” he thought to himself.
The pujari remembered the long hard days where he slept on an empty stomach just to make sure that at least some farmers did not go hungry.  However, now the pujari realized that he needed to beg for alms for only himself.  The farmers did not really need any lunch because now they had a cartful of food every day.  They could also save a little money from their wages and use it for emergencies.  So while he was happy that the farmers were not in trouble, he was very angry that the immoral merchant who had denied him food for the farmers on the second day of his visit and who was personally benefiting from all the charity being done by his trading partners, was so popular – not only with the farmers, but also with the wicked landlord. 
But the nice man that he was, the pujari prayed for the merchant every day in the temple, requesting God to forgive the merchant for his immoral and selfish behaviour.


CHAPTER FIVE: Moral of the Story

The Sanskrit word for philosophy or direct vision is Darsana.  This short story is seeking to provoke thoughts around the vision or philosophy of social entrepreneurship. 

5 Key inferences that could be drawn from this story are:

1. Innovation and Entrepreneurship is crucial to impact change in Social Sector


While the pujari had a good heart and worked very hard to help his fellow farmers, he could but make only limited impact on their lives.  It was only the innovation and entrepreneurship demonstrated by the merchant that actually created a sustainable change in the socio-economic landscape of Darsanapur.

2. Critical to engage stake-holders as part of the change management process


Many leading change leaders agree that sustainable change needs the involvement of the stakeholders for whose benefit you are attempting the change.  The merchant ensured that the farmers were in some ways contributing to the process that would help make their lives better.  Pure welfare assistance or hand-outs rarely leads to sustainable change.  It may be wiser to invest resources in teaching people to fish and then motivating them to fish for themselves as opposed to giving out fish as alms!
 
3. Unity is Strength
 
An important extension of the engagement of stakeholders is the notion of community assets.  When you have a community own an asset or process of improvement, each individual looks out for the other and can divide the risks and responsibilities so that no one person is overwhelmed.  This principle is used widely by the Government of India when extending subsidies to self-governed self-help-groups (SHG) as opposed to individuals.

4. Sustainability

Sustainability is an important principle of social entrepreneurship.  The pujari although well-meaning deflected resources away from a tiffin box (that could have been a sustainable solution enabler) to food (that was a short term gain).  Planning for sustainability is cardinal in social enterprise.

5. Generating Surplus is Crucial for Stability
 
Many individuals view the notion of generating a surplus or a profit as being in contradiction with trying to help people.  Somehow, making profits while trying to impact quality of life is viewed as immoral.  The fact is, that profits or surplus allow you to attract strong talent and build organizational strength that brings growth and sustainability to a social enterprise.  As Dan Pallota warns us, “Don’t confuse morality with frugality!”

Monday, September 17, 2012

Database Scoring using RFV simplified


Database scoring involves selecting the most important customers of your total customer list.
Typically, database scoring is done so that a limited marketing budget can deliver maximum benefits.
A very common technique is using the RFV to score databases.
This is a short story to show how it works:

There was once a very successful businessman who owned a number of sari shops.  He had 3 sons called, Master R, Master F and Master V.  Very bright youngsters too!
One day, the sons approached the father asking to be taught the business of sari shops.  The business man was wise and knew that the only way to learn was by doing.  And that the most important lesson to be learned was customer relationships.
So he asked his sons to come the next morning to one particular store.  There he gave each of them a present.  And he asked them to give it to any one customer from this shop who they felt was most deserving to be given a present.  He gave them a month to do the job and said that they would all meet again in one month in that very store at the same time.

1)    Master R was in a hurry.  Why do tomorrow what you can do today?  He saw a lady paying for a sari at counter and immediately gave her a gift. “Thank you ma’am,” he said.  “We’re so happy you visited us today – please come again soon.  Here is a small gift to keep us in your thoughts and come back soon.”

2)    Master F was more patient.  He had spent some time at this same store before and knew of a college teacher who visited every Saturday.  Every Saturday, she bought a sari and gave it to her best student of the week (she taught at a girl’s college) the following Monday.  The saris she bought were not expensive since they were for students and the college teacher wasn’t particularly rich.  But the customer was a frequent shopper so Master F waited for Saturday and gave her the gift.  “Thanks for being our regular customer.  Please do keep coming.  Here’s a little something for you”.

3)    Master V was a little more like his father.  He waited for an entire month.  Then he pulled up the details of the customer who had the highest bill.  He realized that she had bought 4 saris at one go!  He drove to her house – a mansion quite a distance away from the shop.  Upon entering the mansion he learned that she was a rich industrialist’s wife with three teen-age daughters.  She had bought them all saris for Durga Puja.  So he gave her gift, thanking her for the business.

The three sons met their father at the end of the month.  He asked about their gifting experiences.
Master R, with his usual impatience jumped in.  “I realized that the sooner I gave the present to a recent customer, the higher the chances of that person coming again.  So I gave the gift to the first customer I saw buying a sari, hoping she could come again soon out of gratitude.  In fact, she did, only yesterday!  So I believe I’ve invested the present most profitably.”

Master F laughed at R’s simplicity – he explained how he waited for a week for the teacher who came in regularly and gave her the gift to keep her loyalty and frequency of visits.  And in fact, she did come again on all the following Saturdays too!

Master V found this all absurd.  He explained how he had identified the most valuable customer of the entire month and had given her the gift only yesterday.  If she comes again, she would indeed be profitable.  He showed every one the value of her bill to prove his point.

All 3 began arguing.  F and V felt that R was being impulsive.  Why the rush?  R argued that time is money.  And old customer does not even think of us as much as a recent customer does.  So the sooner he got the gift to work for him, the better. 
R and V felt that F was wasting money.  The teacher would have come anyway.  Why bother with a gift?  F argued that keeping a loyal customer was far more cost efficient than trying to create a loyal customer.
R and F scoffed at V.  “You really think that woman will want more saris after buying so many the last time?  She also lives so far away!” they said.  V argued back, “She likes our stuff.  She has spent so much with us.  One more visit and she’ll give us far more value than either of your customers.”

Their father intervened, “Let me get this straight.  R: You think the most recent customer is the most likely to buy again if you give her a gift.  F: You think the most frequent customer is likely to buy again if you give her a gift.  And V: You think a customer with highest historical value is most likely to buy again if you give her a gift.  What if I say you’re all right?”

The boys look puzzled. 

The father then pulled out a long list in which he had meticulously recorded actions of every one of his customer with their dates of visits and purchase details for the last 3 years.  He then gave the boys 10 presents again and said, “Why don’t you take a day more and try again? Tell me whom you would give these 10 presents to.  We’ll meet tomorrow on this.”

This time, the boys knew they were on to something.  Otherwise their father wouldn’t have parted with this list, which he updated every night and kept locked up in safe.  After some fighting and quibbling, the boys prioritized all customers and agreed on 6, who were:
Very Frequent (came in at least once a week) + Very Recent (all of them had come to one of their sari shops the previous day) + High Value (all of them had purchased over ten saris each in the last one year)
There was no dispute there – these 6 customers needed to be given presents.  But there was some trouble deciding on the last 4 gifts.  They had to decide between:
  • High Value customers (those that had purchased 20 saris last year but not come even once this year? 
  • Highly Frequent customers (those coming every day but buying very cheap, low margin saris)?
  • Very Recent customers (all that came in this morning – hoping that they will come in soon again if they receive the presents)?
The next morning, they went to their father with this dilemma and apologized for not being able to decide on the balance 4 gifts.  “Great!” said the father.  “You’re now ready for database scoring”.  The first six customers basically have full scores on parameters of Recency, Frequency and Value.  The balance, you’ll now give less than perfect scores since not all of them score as well on all three parameters.

“But how should we decide which customer is more important?” asked the boys sheepishly.  “An infrequent customer with high value or a very frequent customer with low value or a very recent, high value 1st time customer?” he continued.

“You test!” said the father.  “You test by giving presents to those coming in once a week, and to those buying 5 saris at one go and to first-time customers.”  See who comes back to buy more.  Then you you’ll know what works for you and which parameter to value more after scoring.”
The boys were mixed with exhilaration and confusion.  They now realized the value scoring the list (database) their father had given them testing to refine their marketing strategy.  They were excited about building their own learning and experiences into scoring.

Learning:  All other things being equal
  1. A Recent customer is more likely to respond to a marketing stimulus than a less recent customer
  2. A more Frequent customer is more likely to respond to a marketing stimulus than a less frequent customer
  3. A customer having given historically higher Value of business is more likely to respond to marketing stimulus than a customer having given less value to the business
Database scoring using RFV involves scoring a customer record on each of these 3 parameters (say classifying a customer as "High", "Medium" or "Low" on each) and then experimenting with various combinations to learn which of these segments offer highest opportunity for ROI on marketing stimulus.