Selling High End Services Through Customer Dilemmas

The technique of  differentiation based on some elements of "marketing mix" - product, price, place, people, process, or physical evidence, does not work well in high end services. 

That is where the technique of selling based on customer's dilemma comes in. A dilemma is defined as a choice among options that seem equally unfavorable or equally favorable. Dilemmas are not problems - because problems have solutions but dilemmdeas do not.  Dilemmas are not solved but resolved - by properly weighing competing options.   

WHY THE STANDARD POSITIONING DOES NOT WORK?

If you sell your service as a solution to a problem, the client may say “I can do it better myself" or "I know someone who can do it as well as you". But say the same thing as an answer to his dilemma and he may get interested. 

Service : Outplacement
Say : "We help managements (with the dilemma of how to ) fire one of their friends.”

Positioning based on dilemma captures several messages at once. It conveys what you do and also the special way in which you do it.  

Service : PR
Say : "we help companies develop communications for situations where communicating facts is a risk but not doing so is also a risk". 

Service : Financial Planner
Say “I help executives who don't trust experts but are simultaneously afraid that the world is complex and they must act under advice otherwise they may forego  opportunities.  

 
Service : HR Consultant
Say : "We help clients who do not know whether to take a rigid approach to treating talent and see their best people leave or whether to treat people on a case by case basis"

Rules and Tools for "selling" complex & expensive B2B solutions or products

The "sales funnel" approach advocated in most sales management books ( prospecting, planning, contacting, presenting, overcoming objections, closing, transacting, delivering. commissioning and collecting) works only under those circumstances which have following 3 conditions present : 

1. the selling situation is P2P (Person To Person)
2. the customer in front of you understands his need
3. whatever you are trying to sell already exists 

What about rest of us who are in charge of selling complex , customized, high value solutions and products - like projects, offset printing machines, industrial air conditioning plants, call center services to foreign clients, the idea of including your group of publications in your client's media plans, ERP systems, pitching for a new client account in the advertising business  etc ..? 

THE APPROACH YOU NEED IN THESE CASES IS ALTOGETHER DIFFERENT.

• Before anything else you must understand the difference between business development and selling. Business Development is the coldest of the "cold call" situation - meeting a customer who you think can benefit from what you offer - but he does not know it and has not even thought about it. In short, in business development you meet a customer who is not searching - even 1% - for a solution, vendor or product. He does not have intention, organization, specification, RFP or a budget for what you are trying to sell. The business development is the most demanding selling situation. It is like winking at a girl in a dark, she does not see it !  
• It is therefore needless to say that you should not begin such contact by talking about your products, features, prices or terms. None of these make sense to the kind of customer we are talking about. He has not thought about the need, let alone the solution that will address the need. He needs to be sold about you first, your identification of the need secondly and - if you successfully cross these two filters - you will come to the stage of selling features, price and terms at the last stage.
• In such situations - even if a client has RFP (Request For Proposal) ready, you must assume - although you should never say it - that the client does not clearly know what he needs. At the most the client may know a few "symptoms" and “pain points” but he has not clearly know what his needs are and how to specify the solution that will satisfactorily address those needs. Of course, a client who has an RFP is better than a company who still has not reached the RFP stage. All that I am saying is do not treat an RFP as gospel; it is a starting point. The clients will love you if you find and suggest a serious flaw in their RFP. It will establish you as an expert. 
• Your actions under this type of situation should be to
• demonstrate you are an expert and also trustworthy
• show you have the inclination and technique to partner with the client
• to stimulate client's thinking through questioning and position you as an expert
• help the client create solutions which he alone could not have thought of

The model to use here is not "sales funnel" but "DDDD loop" which consists of Discover, Diagnose, Design and Deliver. In conventional selling a salesperson starts with a product which is already designed for a known target market and his task is to present the product interactively - in the light of the need of the customer- so that an order can be obtained. In short, the emphasis of the traditional selling is on salesmanship. On the other hand, a sale of the kind we are talking about is a combination of marketing and sales put together : it is first understanding the need of the customer, figure out what he wants, configure it for him and only then  begin selling it. The people who succeed in project selling therefore are 

1. who diagnose the client needs by discovering through questions and facts
2. who use rational and consultative approach to come to a conclusion
3. who let a customer realize his cost and pain without hurrying him 
4. who help a customer in arriving at a solution.

The pitfalls to avoid in such situations are

1. Do not make premature and speculative suggestions and presentations
2. Do not proceed without customer take co-ownership at all the steps
3. Not to tell customer it is not a plug-in product; he too will need to change his ways
4. Not to check if the customer has an immediate reason and resources to change 
   

True? A "tailored suit" is a product & a "Vehicle Loan" a service ?

A marketing eye sees things differently than a government economist. Economics data of the government shows a suit to be a product because it is tangible. They classify a vehicle loan as a service because it cannot be touched. But this is superficial ! The way the marketing eye sees it , the "litmus test" of service is not its tangibility but it is asking yourself the following 3 questions sequentially 

1. What is the main value a customer is seeking 
2. This value cannot be inspected / experienced by a customer before buying 
3. The source of this value is hidden in a given person or an entity

If your answer is "Yes" to both "2" and "3" you are surely talking about a "service". Even if what you are selling is tangible. There are many examples that come to my mind : a photo frame of a god is tangible but the main benefit the customer expects to get from it is to bring good luck. It cannot be inspected or experienced and is a hidden quality. The value comes more out of faith. You must use the principles of service marketing if you are marketing photo frames of gods.        

If you apply these criteria, it turns out that a tailored suit is largely a service whereas a vehicle loan is largely a product. 

TAILORED SUIT : The main value you expect from any suit is that it should sit well on you and that it should make you look good.  This main value does not come either from using good materials or a good sewing machine – it comes from the quality of craftsmanship hidden in an individual tailor. A good tailor knows how to measure you, how to advise you, how to cut the fabric and how to adjust the fit at the time of the trial.  Therefore a tailored suit is more of a service : it is people dependent, customers will pay a good price for the right person and it is difficult to scale up. Ability to scale up is another important criterion of service. If a tailor is doing good business in a location, you cannot fund him and ask him to start 10 tailoring shops. The crucial ingredient is a talented tailor – how will you recruit or develop 10 tailors for these 10 shops?

VEHICLE LOAN : The main value you expect from a vehicle loan is a good interest rate, suitable repayment terms and an easy documentation requirement.  These main values can be easily pre-inspected. Besides, the source of these values is not some qualities hidden in some individual person. Therefore a vehicle loan is more of a product and this is reflected in the fact that it can be quickly scaled up. A vehicle loan scheme successful in one city can be rolled out to hundreds of cities nationally within a week by briefing the local staff and by advertising.

Strange are the ways of the Marketing Eye.

A "Narrowly focused" e-marketing approach is becoming more profitable

The internet is already huge ( Google estimated the size to be 5 Billion Gb data in 2008 ) and becoming more so with several billion pages getting added every day to the "cloud". Over a billion people are connected to the net and 500 million surf at least once a week. You and I probably are among the 100 million who are on the net at least twice a day.

Consider the fact that people now can connect to the net in an instant - by just looking at the screens of their smart phones - not to mention push mail devices like Blackberry - which deliver e mail in your pocket phone - whether you want it or not - because it is connected to the net 24x365.

The time has been indeed ripe for the social media to appear : Twitter, Facebook and Linked- to save us from the onslaught of the trillions of pages of content on the net and help us to filter, follow & befriend only those we like to. People increasingly want to  exercise a personal control on what I want to hear and from whom.

Marketers - used to sending generic e mails - using mail-merge and auto-send programs - are at best losing an opportunity to engage customers on the personal level that those customers now expect - and, at worst, they run the risk of being seen by their potential customers as "spammers". Once your customers see you as  a spammer, your mails can actually frustrate them, damage your brand and reduce customer lifetime value because you are losing access to your market : they dont want to read you anymore. Every un-targeted and irrelevant message is a reminder to them that you neither understand them nor care.

For the last few years data mining has evolved to enable you slice / dice data to reveal patterns that will aid your decisions - and the next orbit of predictive modeling is just round the corner - which can identify  customer groups 

• who will buy (or renew) in response to a campaign - who otherwise would not have done so
• who would have bought - whether or not the campaign ran
• who would never buy - even with the campaign
• who hate being contacted 

This will allow you in future to focus efforts only on narrow and specific groups which will not only reduce the cost of  your outreach but it will also help  reduce your cost of fulfillment  as it will avoid your giving away  incentives to customers who would have bought anyway - at full price.

Pricing - why do you assume that people are different from what you are ?

Despite what the common sense would tell you, the fact is that we all act stingy on things we need  but don't really want. Conversely we are generous on  things we want - but do not really need.

That is why a customer may prefer to spend 3 times on a BMW than a Kizashi which is almost as good. But when it comes to disposable ball pens, the same customer may choose a Rs 5 ball pen over Rs 8 !

I have always believed that you should generally not under-price yourself for premium, luxury products. In fact you should raise prices! How many know the case of the famous Tag Heuer watch brand : it did not sell well at popular price so they raised the price to make it exclusive and the rest is history.

Whenever you are tempted to lower your price compared to your rival X because his brand awareness and value is more,  ask yourself if you would rather let a prospect walk away saying "I wish I could afford his product" OR " If the price is what it is, I wonder if the product is really as good as I thought it was"?"

Ask yourself - is your shirt the cheapest you could find? is your vehicle the cheapest available? in fact almost nothing that you purchased in the last 1 year was the cheapest in that category. Then why do you assume that the rest of the world is any different from you?

7 Ways to sell more even if your product is the same as that of your competitor

You don't always need to have a better product to compete; and sell more.... 

1. Even if your product is the same as your competitor, you can still sell more by making your  product available to the customers where your competitors’ product is not available. Identify where your competitor’s product is not available – but where the customer would appreciate it – and you score over your competition. This is true particularly of convenience products like toothpastes and soaps because people must find them without walking too much. The same applies to impulse products like soft drinks, confectionery, eatables, affordable fashion. How would customers buy unless they see it prominently. My friend Jagdeep Kapoor says; “jo dikhta hai woh bikta hai”  
2. Even if your product is the same as your competitor, you can still sell more by delivering it to customers where, when and in quantities they require. For products which are heavy, cumbersome or risky to carry, this works. These days, where walking or traveling is becoming increasingly difficult, would offering to deliver helps? My friend Jayesh Ravindranath says; “we recommended to Dubai based retailer Choithram that a kiosk be put after the checkout counter so that anyone who does not want to lug the goods along with her can have them delivered later when she wants it by paying a small fee and leaving them at the kiosk”. Even in B2B selling, customers who are space constrained will appreciate more frequent deliveries in smaller lots. The customer will save a lot of space and will pay you for it by giving you a better price.
3. Even if your product is the same as your competitor, you can still sell more by providing financing to your customer through a various schemes like loans, hire purchase, EMI etc. This is true for big ticket items like cars and expensive consumer durables. My friend Sundar says, “An LCD TV at a price of Rs 60000 is a very different “product” than the same TV at a down payment of Rs 5000 per month and an EMI of Rs 3000 every month.” The market expands dramatically many fold when you provide finance - many more customers can now afford to purchase it.  
4. Even if your product is the same as your competitor, you can still sell more by if people are more aware of your product. This is particularly true of fancy, novel products and un-needed products like fashion, novelties, curios, small and big luxuries, insurance policies etc. Your customers tend to buy them when they become aware of them though ads, showrooms, window displays or sales pitches. My friend Vikesh Wallia once said; “a large display window of a department store on the high street of Pedder Road went for a song whereas an outdoor sign board of the same size near the store went at several times the price”. The difference was that the signboard went from the advertising budget of the Product Manager through an ad agency whereas the compensation for the window display went from the display budget of the area manager through the distributor.  In the insurance business I know many customers who rue buying a particular policy because they were not aware of what was the appropriate policy for them. There are literally millions of products out there on the shelves but the customers can keep hardly 3-4 alternatives in their mind for every product category they are likely to buy. This is called as "consideration set" of each customer. If you are not in the consideration set of a person, it is highly unlikely that she will buy your product. She does not know it exists!
5. Even if your product is the same as your competitor, you can still sell more by educating and  updatingThis is true for situations where the customer does not know that she has a problem, or that there is a solution or how to access and use the solution. Suresh Goklaney of Eureka Forbes says; the customers. “when we launched vacuum cleaners, people were not aware that the millions of dust mites hidden in carpets, upholstery and curtains lead to respiratory irritation of house members. Or, when launched AquaGuard water purifier, people were not aware that 80% of the diseases in a tropical country like ours were due to water borne disease-carrying bacteria. The biggest task was to make the customer aware that she had a problem using educational approach and demonstration. After that, the product sold itself in most cases.” I know of a printing press owner who was eternally grateful to a sales executive who educated him that,  instead of buying a new offset-printing machine costing several crores, he could purchase some balancing equipment and change his layout to increase his plant capacity at only 20% of the cost of a new machine. The printer never ever questioned the quotations or prices of that sales executive after the episode.     
6. Even if your product is the same as your competitor, you can still sell more by providing expertise to the customer and help him diagnose the problem and suggest a solution. This is true of situations where the customer does not really know how to define the problem and evaluate a solution. My friend Satish Menon builds houses and says, “a customer was so fed up of water leakage during monsoon in his flat that he was seriously thinking of selling it off. I spent half a day investigating it and found that the holes drilled to drive nails in the neighbor’s external wall were  responsible for the leakage. He was happy to pay me 3 times the price I was really expecting.” 
7. Even if your product is the same as your competitor, you can still sell more by helping the customer to install, fit and commission it. This is true of products which need to be connected, installed, fitted and commissioned at site. This is normally true in B2B businesses where plant and machinery is bought by the customer in bits and pieces from different vendors but needs someone to put it all together and make it work. Even in B2C situations, architects, interior decorators, engineers etc work in this fashion. Customer always pay good price to people with good reputations and good work to show off.

Why should you care for services if you make only products?

If you sell products, you may be looking at your Profit & Loss statement - and seeing a lot of manufacturing costs sitting on it - and may be coming to the conclusion that you are in "Product Business". 

But there is a different perspective. The fact is that your customers use your products along with a lot of services and it is quite possible that they may be buying these services from elsewhere. Your sales and profits can actually improve if you recognize that your customers' satisfaction comes out of a combination of your products and someone else's services. 

Let us say  you  are  making  and selling diesel  engines. Does that mean to you that you are in a "Product  Business"?   Banish the notion and see what  your customer  is buying and you  will realize  that  he  is  almost always buying  your  product  along with some services . For example, your  diesel engine will not get sold to a fisherman for his boat unless there is someone to explain to him what type of engines are available, which of these are suitable for his needs, why a specific model is better, answer his queries, to take down his order, to deliver  the engine, to help him install it,  to be there to take his call in case repairs are needed, to go and repair it…etc . All of these are services ! Without these services your engine will not sell.
 
It is possible you do not see the service delivery activity on your P&L account because you have chosen not to undertake the service directly - instead you may be paying the trade (or someone else)  to conduct the pre-sales, sales and after-sales service activities for you.  It may not be on your P&L account but it does not mean you are not responsible for the service delivery.  As far as your customers are concerned, you are responsible for the service because you are selling to them under your name and hence must be responsible for all the services they need to purchase, install and use your product. Many companies see the service as a hassle, an activity that generates nothing but complaints. They prefer to operate manufacturing in one central location where everything can be planned and controlled nicely. Service is not so nice. It is  spread-out, demand for it is unpredictable and it is very difficult to please the customers and also to retain and motivate trained employees. But, when it is becoming increasingly difficult for marketers to differentiate their physical product, service is emerging as the next frontier.
     

A LOOK AT HUL THROUGH ITS P&L LENS

But let us go back to our original thread : why do companies remain under the notion that they are in "Product Business" ? Let us take the example of Hindustan Unilever Limited. Most people, including probably the company executives themselves, may be under the impression that HUL is in “product business”.

Their  P&L shows that ,for the 12 month period ending December 31, 2007,  its  Income   was Rs 14106 Crores and its  Operating  expenses were  Rs 11797 Crores . The accounting policy of HUL shows that sales are net of taxes and also net of the trade commission paid - generally 8% to the distributors and 12%  to the retailers. Let us  recast the P&L account of HUL from the customer perspective and it will be seen that the turnover of HUL is, at consumer prices, actually Rs 18760 Crores and this pie splits as follows.

Trade Commissions :  Rs   3250  Crores ( Service * ) : 17% of consumer spending ( Rs 18760 Crores )

Taxes :  Rs    1400 Crores ( Government )  :  7% of consumer spending

Materials  :  Rs    7414 Crores ( Bought out ) :  40% of consumer spending

Machine  Depreciation : Rs  138 Crores ( Book Charge ) :  1% of consumer spending  

Services ** :   Rs    4409 Crores ( Service ) :  24% of  consumer spending

* service to the consumer and trade is compensated by way of commissions

** employees, ad & promotion, freight

In other words, when consumers spend on HUL products, 80% of it  gets  almost equally split  between  buying of services and buying of  materials : HUL is as much a service organization as a product organization.

The misconception that HUL is in “Product Business” comes from the narrow interpretation of what costs are seen on the books of HUL. What is missed is the fact that HUL’s products will not sell unless they are widely available, widely seen  and widely known. HUL has to do all this - it has no option! But HUL does not do this under its own banner - but gets it done through their sales force (which is on their P&L ), their distributors, their retailers and their ad agency. During the year under discussion as above, they incurred Rs 3250 Crores of trade commissions and Rs 1400 Crores of advertising – a whopping Rs 4650 Crores worth of services - and they do not include other services like travel, sales force salaries, sales offices, godown rents etc. If they too are taken into account, the figure will come close to what they are spending on manufacturing activities.

Ultimately it is HUL which is the wellspring of the service activity : the sales force which contacts its distributors which appoints and services them, the salesmen and delivery boys of the distributors who contact the retailers and sell to them, the merchandisers who put up the shop displays, the billboard contractors who put up HUL ads on their sites, the ad agency which creates ads and releases them in media. They are all  services.

Whys is this important? Because many companies are acting under the wrong notion that they are in the "Product Business" whereas, in reality, they are - and should be acting as if they are - in "Service Business".  Is there a difference in these two in terms of action ? Yes - and huge !

"Product Business" people tend to get occupied with materials and machines and related stuff like sourcing, purchasing, plant layout, supply chain, cycle time, down time, preventive maintenance etc. "Service Business" people tend to get occupied with things like organization, competencies, motivation, performance tracking, training, culture etc. 

Those who think who are in product business must learn to go through the following SARP sequence to understand what business you really are in

• what are you selling ( vacuum cleaner )
• what application your product enables (cleaning )
• what result comes form the application ( good impression )
• what payoff is acheived in the end ( favorable customer perception )  

You understand what business you are in only when you can answer all the 4 SARP questions.  

 

None Returns to tell us of the Road ...

There is no shortage of theories. But what an executive needs is to be able to apply the theory to his specific context. For example, in sales management, the royal road is to be able to sniff out people with good selling ability and then hire them. Many travel on this road but not many have left behind a road map. This is what happened to me when I followed this road... 

Is it not strange of the many who,
Traveled before us, the door of darkness through
None returns to tell us of the road
Which, to discover, we must travel too.
( Omar Khayyam)


I had just joined Eureka Forbes as the Head of Marketing in 1998. Our large sales force of over 4000 people - operating out of over 150 offices in 90 cities of the country - was considered to be a great tool of our marketing. And I was keen to learn how to improve it  further. The annual “Silver Circle Club” for the elite 20% salesmen at Goa in 1999 was my first opportunity to observe them. I learnt an important lesson there about selling qualities among people.

In Eureka Forbes we always assigned a very high importance to our front line sellers. We never called them  as salesmen and instead fondly called them as “EuroChamps”. In the annual “Silver Circle Club”  the  top  EuroChamps were taken every year to an exotic tourist place in India and given a time of their life for 4 days. They were put up in five star hotels, had a  non-stop party during this entire time,  were treated like royalty in great style and all their bosses would be in attendance at that time to serve them and help them enjoy - including the CEO of the company. No expense or effort was spared.  The entry to the club was by qualification only. The EuroChamps had to achieve special sales targets for 7 continuous months to qualify to come to the club.

The managers too loved the club.  The club was a tool to get them to achieve a large part of their sales target. All they had to do was to drum up sufficient number of EuroChamps under them to enter the club. After that the aura of the club - built up over the years - worked its magic into the sales force. Being present in the club had assumed legendary proportions in the sales force because it was a sure way to hobnob with the managers and get known to them. Most promotions took place from among those who were regularly seen at the club. Not being in the club was a big let-down. 

It was my first Silver Circle Club at Cidade de Goa in 1999. I  had an idea of conducting a survey to capture the profile of these highly successful EuroChamps to see what drives them. I designed a simple questionnaire, put a serial number on each, distributed these  among all the rooms  and announced that a raffle will be held the next day based on the serial number. Most submitted their filled forms the next day. When we analyzed the data after coming back from Goa, there was a shock waiting for us. The elite of our sales force was less educated than the rest of them who were not so successful. Some of the best EuroChamps were not even graduates!  Did it mean that less educated the person, the better he will be in selling? That is what the  textbooks would have use believe.

I remember discussing this with Adil Bhesania - my colleague from HR who had just joined us from Coke – to make sense out of this seeming anti-correlation between education and selling ability. After many discussions we formed a working hypothesis – which I still believe is true – that our education system is largely based on mathematical, logical and linguistic ability, and does not impart, nor evaluate, the selling ability of a person. We both were excited because till that time we were short listing candidates for front line selling positions based on their educational qualifications. The simple survey showed that educational qualifications were not really the qualifications to look at for a front  line selling job!

We were convinced by now that we were on to something big because we had a big problem of having widely varying recruitment standards because our 175 offices in 90 cities interviewed virtually every day. Very few of these offices could afford  its own HR officer who could assist in interviewing process. In 90% of the offices the recruitment was done essentially by the executives from the sales operations function.  Both Adil and I  began looking for a “test” or a “scale” that could be administered to all aspirants uniformly in all locations. Our aim was to take more people into the sales force based on their selling ability and not based on their educational qualifications!

We searched high and low. Many consultants were will gave us "gyan" about motivation and organizational behavior. But no one really came forward to give us what we wanted which will enable us to administer a test uniformly at all locations to sniff out people with selling ability. We had given up the hope of finding a simple solution when we happened to meet one consultant. He not only offered to suggest a test but also explained very simply and convincingly what does a selling  ability consists of. His name was Harish Shivdasani and he was a psychiatrist by training!

We did not believe him at first. Then Adil came out with a brilliant idea and - to our surprise  Harish agreed to be subjected to our acid test. We told him we will buy the scale from him provided his test could sniff out best salesmen from a random group. We hired a hall and gave him and gave him a mixed group of 40 persons - 20 of them were Silver Circle Club members and 20 were not. And nobody knew who was who except us. Both of us were really amazed to discover that more than 80% of his choice - based on the test scores - was correct. His test could indeed distinguish top salespersons from those who were not. 

It is another story of how we bought the scale from him and wanted to deploy it across the country. It was an interesting experience for us to practice our version of "scientific sales management". And it furthered my belief that a simple glimpse of insight, validated in your own context, is better than being lost in the temple of a comprehensive theoretical model. 

This I know of the one true light
Kindle me to love, or wrath consume me quite;
One glimpse of it within the tavern caught,
is better than in the temple lost outright
( Omar Khayyam )

What is more important - Strategy or Implementation ?

Thousands of young MBAs enter the industry every year - only to find they have been taught the strategic part of marketing which they will not have a chance to practice at least for the first five years of their professional life. 

The bigger and more reputed the company, the longer it will take them to come to a point in their career where they can practice what they learnt in the B school.

Virtually all marketing activity is unique (not repetitive) and can be carried out in 4 steps (1) Discover the situation through data collection (2) Diagnose the problem that needs to be solved through analysis (3) Design the solution through application of strategy (4) Deliver the solution through implementation. The paradox is that in the B Schools we teach them the first 3 parts but not the last part - and that precisely is the part the industry wants young MBAs to do at the beginning of their careers! 

New MBAs are first placed in "operations" before they get to work on strategy because it is the primary activity of the business and anyone who wants to ultimately lead the business at the highest level must know "operations" well. What is "operations" - the definition varies from business to business but generally the following are considered as "operations"

• Sales : customer contact or supervision of customer contact
• Support : helping customers, sales force, distributors, dealers
• Operations : produce and reach materials to those who need it
• Assistance : to their bosses in managing their jobs. 

If this is what the industry wants; why don't we teach these subjects in our Business Schools? There are two main reasons.

1. Operations are not in media limelight - the Brand Equities and Business Lines do not consider leaders in customer service, training, administration etc as protagonists of the industry. They hero-worship strategists, visionaries, missionaries and thought leaders. Ram Kumar of ICICI once said that many professors would be proud to say that they teach strategy but not many would like to identify themselves as teaching implementation? Implementation is just not fashionable! 
   
2. The second reason is more interesting. Our current education depends almost entirely on the written word in the text book and the texts can carry only explicit knowledge - the one that can be captured on paper, transmitted through writing and reading and evaluated through an examination. That is why we do not pay much attention to the subjects with a high amount of tacit knowledge because it cannot be easily captured into a  textbook. 

This has bothered me for the last several years when I taught at some of the B Schools around Mumbai like SPJIMR, NMIMS, JBIMS and MICA. I was fortunate in finding many professors who resonated with my plans of teaching "practice of marketing" and I began developing a systematic approach of teaching practice of marketing at S P Jain Institute,  NMIMS and at MICA. Prof M S Rao invited me to teach at his "Start Your Business" program at SPJIMR.  Prof Mala Shrivastava at NMIMS encouraged me to design and deliver a course on "Marketing Implementation". Prof Atul Tandon at MICA invited me to teach a thoroughly practical course on "Sales and Distribution".  The results in all cases were beyond my expectations. Many students said "now we will know what to do when we enter the industry". 

What is the main difference between strategy and implementation? From my perspective it is simply this : a strategy is about cerebral concepts, an implementation is about influencing the behaviour of people. The strategist thinks there is an absolute & correct answer and once it is found, the job is done - the implementation can be delegated down the line! The strategist spends 90% of his time in situation analysis and strategy formulation. The implementer is very different : he believes a startegy merely makes the outcome possible but it is the people who make the strategy happen. He believes that a strategy that does not excite and motivate people is a non-starter; even if perfect from a textbook viewpoint. A pragmatic strategist begins his search for "what to do" not only through data analysis but also through peeking into the hearts and aspirations and inclinations of the people who will carry it forward. Your reputation as an executive is built up not only by knowing the theory that goes into making the plan but equally importantly in knowing the people who will deliver the plan. As the book "Good to Great" says, the people come first and the strategy comes later in great companies.

The main issue in any implementation is whether you know who are the key people in your organization whose behavior you need to influence in order to get your plan implemented?  The key question he asks himself from the implementation perspective is whether he has created communications, mechanisms and organizational support  for these implementers to

1. ACCOUNTABILITY : (1) Make them feel they "own" the plan (2) Let it be clear who is responsible for implementing the strategy in a given region, account, location etc. Deciding a strategy and then not knowing who will action it is a non-starter!
2. STANDARDS : It should be clear what observable / behavioral outcomes need to be produced. Many times people understand the goal (example : to become customer centric company) but don't know what they need to do about it.
   
3. CONFIDENCE CREATION : People's confidence is high if they have done it before. If not, it can be built up by training. Ideally the people who will supervise them should take part in this training.  
4. CONSISTENT SUPPORT : (1) CULTURE : It helps if it becomes a part of "how we do things around here" - meaning there is plenty of informal chat and folklore around the required behaviors (example : how the boss caught him for not doing this) (2) CONNECTIONS : Other things in the company are connected with this .  
5. MOTIVATION : Personal consequences (reward or otherwise) are created and communicated.
6. COMMUNICATION AND FEEDBACK : goal setting and periodic previews and reviews happen based on this.
   

None of these 6 points are what glamorous theory and concepts are made of. Yet, these simple points make up for great execution.  

WHOSE BEHAVIOR  NEEDS TO BE INFLUENCED : First you need to be clear who are the key people in your company whose behavior you need to influence to get your plan implemented. Just because you have written a plan and sent to everyone does not mean it will get implemented. Just because someone's job description involves implementing your plan does not mean it will get implemented.

DO THEY FEEL A PART OF THE TEAM MAKING THE PLAN : If people feel that the plan was thrust on them, there is very little chance that people will behave in the way you planned. This does not mean everything should be the way every implementer wants it but you must ideally consult them before finalizing the plan. Many times most people not only feel good when they are consulted but also make valuable suggestions to improve your plan. If there are many people then you should consult their bosses and not they themselves. If they are good bosses, they will consult their people anyway. 

Generally the implementers themselves should be asked to make a plan because then this question becomes redundant. But occasionally situations may arise, particularly in the areas of strategic planning etc, that the management may think that only specialists can plan. In reality, the specialists should be put into a consulting roles and the implementers should be made to consult them so that the ownership rests with them only. Where this is not possible, the planners should definitely consult the implementers in any of the two ways : either the planners make the plan first and then run it past the implementers or it can be the other way too.

DO THEY KNOW WHAT OBSERVABLE OUTCOMES THEY NEED TO PRODUCE ? Many times your plans are wrapped in a strategic and theoretical language and the people at the operating level do not know what is actually expected out of them. If you are running a retail promotion, your own statement in the plan regarding customer behavior - "the availability is very important for customers during festive buying because they need to take home the product by evening that day" - is correct but I am sure the salesperson on the beat will not know what is he expected to do about it. You must clearly state that the "opening stock on the first day of the festival in every A class store should be at least equal to 10% of your monthly sales target or 50% more than the mast month's sale from that store - whichever is higher. Please compile this for each store and give it to the local godown by September 30th." Of course every small thing need not be specified but major operating actions of major implementers must be planned and communicated effectively.

HAVE THEY DONE THIS BEFORE? HOW CONFIDENT ARE THEY OF DOING WHAT YOU ARE ASKING? What is obvious and easy for you may not be so obvious and easy for all those involved in the implementation of your plan. Many plans fail because the standard actions, systems, materials, formats were not shown to the people who had to use them.


DO THEY KNOW WHAT SUPPORT WILL THEY GET? FROM WHERE? HOW? Do they know what resources they will get ? To continue the example of the retail promotion, do they know where they will get the tags and display materials, when will special products come and in what quantities, whether the store will remain open throughout the night to enable them to put up the display overnight? Most planners are happy to see the materials in their offices but it is a mistake. The plan will get executed only when all these materials come together in the field for every implementer and they know how to use them and are given an opportunity to do so.

DO THEY KNOW WHAT ARE THE PERSONAL CONSEQUENCES AWAITING THEM ?  Just because there is a circular or an e mail from you does not mean it will happen. Almost the whole organization is competing for implementation as far as the front line employee is concerned. His boss , his boss's boss, his HR Head, his Admn Head, his Regional Head, his Product Managers and his customers .... are all in line for his attention. He does those things where he clearly sees a positive payoff (benefit) or a negative payoff (scolding). You need to make sure that the implementer knows what these are - ideally this should be done through his boss. The payoff to the employees need not always be money; it can be recognition also.

WILL THE IMMEDIATE BOSS LEAD, GUIDE OR HELP? OR AT LEAST WILL NOT HARM ? The support from the immediate boss is very important. Ideally he should go all out and support. At the very least, he should not distract the employee from the behavior demanded by your plan.

Advertising a product or service for the first time ? Beware !!

Many who advertise to push their products hard into the market for the first time get hurt so badly that they do not return to market again. Some even close their business! Many people think that once they begin advertising ...

customers will become aware and begin buying and the sales level will increase. Well, that is how it is supposed to happen. It is literally worth millions to you to learn why it does not happen this way many times - and what you should do to avoid losing money due to advertising.

A strong burst of advertising is like an air force attack. The planes are visible, fast and power-packed. But it all gets over fast and before you know the planes have unloaded their bombs and headed home. In the same way, a strong advertising blitz through mainline media can guzzle millions of rupees a week and, before you know, you will have finished your budget!

If you are the first timer in the world of advertising, chances are that you may not have got your act together - because you have not advertised before! Even if the campaign works out without a hitch, you will face problems you had not anticipated. For instance, chances are that you will discover that your supply chain is not adequately tuned to cater to your needs.

In 1992, I was Vice President of Marketing and Sales at Balsara, we watched the entry of IPCL into mosquito repellent mats market with a brand called "6-to-6". We were selling similar mats under the brand name "Odomos Mats" and our Chairman Aspi Balsara was rather concerned what would happen to our brands because they had a good story (a mat that lasts 12 hours from 6pm evening to 6am in the morning) and were highly visible on the TV with a good looking ad. I told him I was not concerned and it will be only a few months before the brand got wounded. Sure enough, what happened was worse than I had predicted - they closed down the whole consumer division . This resulted in their having to sell off their brand Teepol too!

How did I know ? Because their supply chain and distribution network was so weak that it could not have kept pace with the kind of national TV advertising they were doing. They had a distribution system that was created and sustained by their dish-wash liquid brand Teepol. It was a niche brand, used only by a few top households in the country - and its distribution footprint was woefully inadequate for the mass media campaign they had unleashed. By 1992 calculations, for a mass advertised brand to sustain itself and make it financially worthwhile, it should have to be  in at least 4 Lakh outlets. Teepol was available not even in 40000 outlets! It was to clear to me that the new brand "6 to 6", which was riding on the distribution network of Teepol, could reach only about 40000-50000 outlets. The sale, even if brisk, from so few outlets, could never have sustained the expense involved in national TV campaign. It is easy to spend millions in media but it takes years to increase distribution from 40000 to 4 Lakhs on a sustainable basis. That was the rub. Before they could even begin expending the network and supply chain, the campaign was over! A huge amount of cash was spent - without a commensurate sales in return. The consumer division never recovered from the red ink created by the success of advertising!

These kind of supply chain wrinkles cannot be ironed out in a hurry. A furniture retailer from Mumbai advertised 3 furniture items together. For one of the items, the response was so overwhelming that he ran out of stock and incurred an opportunity loss. Since the item was imported, it would take weeks before he could get the next order in. On the other hand, one of the other two items he advertised had no takers.

No air force can win a war by itself. Its action needs to be co-ordinated with action of troops on the ground and directed by generals who have an understanding of what is happening in the entire theatre of the war. Similarly, advertising by itself cannot generate business and profits. It has to be in tandem with action in the factory and through the sales force and a good distribution system.

Many first time advertisers are in a hurry to launch publicity campaigns because they want to be quick in establishing themselves in a market. What they do not see is that the advertising works for their big competitors because they have got their act together before they started advertising. Their distribution is in place. They know exactly what kind of an impact advertising has had on their business. They have marketing personnel who tap the right target audience, with the right message, through the right medium. These are all pre-conditions for advertising to produce results.

Since “Drinking Chocolate” is a beverage that is drunk hot abroad, Cadbury’s started off by promoting it as a hot drink in India. Later they realized the housewives here were using it more as a recipe ingredient and less as a beverage. The company had to go in for a refocus. Cadbury survived to see another day because it was a going company - but had it been a small company with limited resources, it could easily have gone under for sending out a wrong message.

Good generals use the air force only after their on-ground troops are in the right place and formation, with a good map of the territory and when they know exactly where the enemy needs to be attacked. Similarly, good businessmen should use advertising only after you are sure that the groundwork has been taken care of. You should know who your audience is, what you should tell them, in what tone and through which medium. You should also have a reasonable estimate of what type of products will get sold and in what quantities. But how will you know all this unless you advertise in the first place? This is a very real dilemma for first time advertisers.

Once, working for a comapny called Corn Products ( Now Best Foods) I had to choose a promotional gift for the customers. I sent my product manager to go to Apna Bazaar opposite Regal Cinema and actually offer a choice to housewives who came to buy our products. Within a day we had the answer. 80% of the housewives ignored the fancy stuff we had procured and preferred a plain stainless steel spoon! In our case we had done our homework and knew exactly what to play up.

Market researchers can probably tell you how customers may respond to your ad but you will never know how the industry will react or how the supply system will cope up till you actually release the ad. The wise thing to do is learn by trial and error : test market in one small market then move up the scale. And by all means resist the pressure or temptation to undertake a big national campaign : you may end up losing millions.