Why Southwest Customers Wouldn’t Buy a Bentley

July 24th, 2019

After giving 10 speeches on pricing and profits to groups of CEOs, it is certainly top of mind. Yet, it should always be top of mind for executive teams. One unanimous finding from the informal research of executives is that pricing is a strategic topic.  So, we must find time! When is the last time you focused on pricing?

Whether you consider pricing a strategic topic or not, it will directly impact your business. Let’s start with three typical options from a branding point-of-view.

  1. Low price leader – Southwest and Walmart are great examples of this. No one flies Southwest to have a first class experience. Instead, they are accessible to the general public and fun to fly. Their prices have to match their brand, and low prices do NOT equate to lower profits. Southwest has been consistently profitable when the higher priced airlines weren’t!
  2. Luxury brands – Similar to the low price leader, a Bentley or Gucci denotes the luxury image. If you found a low price on a Bentley, you would definitely think it was a lemon. In the B2B world, the same holds true. We work with a high quality lawn and garden equipment and tools supplier.  Their prices have to remain higher than the low cost brands to maintain their image and customer base. Of course, they need to provide more education and value for their customers as it is what they expect.
  3. Customer focused – In this case, the brand is all about the customer.  These companies are known for going the extra mile and providing superior value for their target customers. If it is all about value in the eyes of your customer, don’t you think your price better align to this value? Of course! If not, it is the epitome of the opposite of the brand.

Have you thought about your strategy and whether it relates to your pricing? It is easy to get caught up in competitive pricing situations and start to lower your price.  However, it might be the time to take a step back and see whether what you are doing matches your branding and strategy.

For example, one CEO provided an example of when she was a VP of Sales at a significant company. They had a niche product with unique value and higher prices. The sales teams were starting to see competition and thought they had to reduce pricing slightly to maintain their position.  The CEO said ‘no’. They were the leader and had value their competitors didn’t. It was a really hard process for the sales team to go back and talk value instead of giving in on price but they managed it. Fast forward to the next year. They were successful in maintaining their prices and didn’t lose business. Instead of falling into price war thinking, they talked about value.

What Do We Need to Think About Related to Strategic Pricing?

From an 80/20 perspective:

  • Who is your target customer? Think about your answer. Hopefully, it isn’t anyone willing to pay for your product or service! Yet that is an easy trap to fall into. Instead, take a step back and think about your target customer. What is their profile? How many current customers are target customers?
  • What do your target customers value? Although we tend to spend 80% of our time on 20% of our customers, the key question is whether these are the target customers. Do we know what our target customers value? Don’t think about your customer base and your daily interactions to answer this question. Instead, think only about your target customers. If you don’t know, find out! Being clear on this alone will yield dramatic results.
  • Is your pricing aligned with your target customers and their expectations of value? This is a tricky one. In our experience, 80%+ of our clients have room for improvement when we get to this point. It also changes over time.  If you last put thought into this even a year or two ago, you are acting on old information!

There is vast opportunity to keep pricing top of mind as it relates to your strategy. Why do this? It is a top strategy to ensure customer value (to grow your business) and increase bottom line profits simultaneously. If you are interested in a pricing & profits assessment, contact us.

Did you like this article?  Continue reading on this topic:
Pricing & Profits: It’s Not All About Revenue
Gaining New Ideas to Increase Business Value



Why Inventory Will Matter Again

June 8th, 2019

I was on a bit of a trip down memory lane over the holidays as I reconnected with former colleagues from when I was VP of Operations and Supply Chain at PaperPak, an absorbent products manufacturer for healthcare and food products.  I recently talked about healthcare manufacturing with a group of powerful women (and a few brave men) at the Professional Women in Healthcare event.  When inventory arose as a hot topic, I thought about paper rolls (pictured).

Actually, inventory was a hot topic as we partnered with key customers to develop collaborative forecasting models, implement vendor managed inventory programs to dramatically reduce inventory and free up cash while improving service levels and to maximize storage and efficiencies in our operations, distribution centers and, most importantly, throughout our transportation system (since absorbent products are bulky and freight intensive).

In our view, inventory is circling back in importance and will become a hot topic again as customers expect immediate, customized deliveries with the expectation of easy returns and last-minute changes to orders in production, in the warehouse or in transit. What are you doing to get ahead of this ‘new normal’ assumption?

To throw out a few ideas to get your juices flowing:

  • Get demand further into your supply chain – what are your customers’ customers selling or using of your product?
  • Be collaborative with strange bedfellows – I’ve written several articles recently on this topic as the most successful executives see the value in finding the ‘win-win-win’
  • What talent do you have focused on having the ‘right’ inventory at the ‘right’ place at the ‘right’ time? You could double your inventory and decrease service if you don’t know how to navigate these treacherous waters.
  • How sure are you that your demand and supply (labor, skills, machine capacity, buildings/ storage capacity, cash flow) are aligned and will remain aligned (review your SIOP plans)?

This topic reminds me of one of my early articles, the Million Dollar Planner. Although that sounds insane, it might be worth thinking about conceptually. If you maximize your customer experience, profitability and cash flow, the return is frequently in excess of a million dollars. Most importantly, what could you do with an extra million dollars? Invest in new products and services to spur growth? Build your infrastructure to enable scalable growth? Build your talent base to create sustainability? The possibilities are limitless.

Contact us if you’d like to discuss further.



We Are All Salespeople

May 13th, 2019

Do you think of yourself as a salesperson? For most of us, the answer is probably ‘no’; however, every successful executive, manager, professional and person is a salesperson.  

Last week, I participated in a consulting conference, and our Society for the Advancement of Consulting ambassadors (pictured here) filled the role of salesperson to spread the word on the value of SAC. We had a great time and many value-added discussions. I find the key to ‘selling’ is actually providing value; not selling people products and services they do not need!

When I think back, I have always been in sales even though I thought I had no idea whatsoever about sales at the time. The way I got my first job was talking about the value of a senior project and how it was applicable to performing a planning role. I had NO idea that this was actually selling but it is how I successfully landed a great job out of college. Early in my career, I found system settings that would make our Coca-Cola facility’s process better, and I had to sell IT and others on why they should support this change. Later at a plastic injection molder, I had to sell management on why we should focus on certain inventory initiatives.

Lastly, as a VP of Operations of an absorbent products manufacturer, I absolutely spent 90% of my time selling my team on how they were valuable to the vision, suppliers on how they could have a part on creating a win-win, customers on how we could create collaborative vendor management inventory initiatives that would increase their service and profit (which would also improve our revenue growth, inventory and efficiencies), the Board of Directors on why we should focus efforts on material projects to drive profitable growth (even though they wanted me to focus on reducing labor costs instead) and the list goes on. In consulting, 80% of project success (partnering with the client to make sure results occur) relates to selling and positioning. After all, doesn’t it all stem from successfully navigating change?

Think about your career and daily job responsibilities. I bet you are selling every day as well!

One tip to implement this week:

The key to success in sales is to provide value. As I read in a book by my consulting mentor when I decided to start consulting, selling consulting services is simply finding ways to provide value to clients by helping them to increase the value of their businesses. Somehow, increasing the value of businesses sounded FAR simpler to me than selling people on hiring me as a consultant (after all, who budgets to hire a consultant?), and so I went for it (and am celebrating my 14th year anniversary in May).

Of course, it isn’t exactly that simple; however, it is absolutely true. The crux of all sales is in providing value. Think about when you purchase products and services. Why do you purchase? I used to think I was quite logical and not influenced by typical sales techniques; however, it is human nature that logic makes us think and emotions make us act. Although I am never tempted by clothes (except as I know I need to look decent to be successful), I realized I spent quite a bit of money on education to be successful in my consulting practice. Clearly, I saw the value and ‘went for it’. How can you show value more often in your job, your company, and of your products and services?



Have You Thought about Increasing Demand?

March 8th, 2019

If you are reading our newsletter, I have no doubt you are interested in increasing demand. Whether an owner, executive or key player, increasing demand for your products and services has to be top of mind. Let’s put it this way. No matter the position of my client (typically a CEO, Owner, CFO, General Manager or Board member), he/she is interested in increasing demand.  Consequently, the projects we work on are typically related to increasing demand, either directly or indirectly.

I was on a panel about increasing demand at the Anti-seminar Executive Luncheon. We had interesting discussions about demand from several diverse points-of-view. Thanks to Chase Photography, you can see them as a livestream on Facebook – video 1 and video 2 (about 60 minutes total). In thinking about how to increase demand, a few highlights include:

  1. Observe how your customer uses products and services –An often-overlooked gem is to follow Apple’s lead and observe how your customers are using your products and services and look for ways to enhance their experience. Have you taken a step back lately to look for areas where you can further help your customer?  Do you make working with your company onerous? That’s an obvious one yet commonplace. Imagine if you looked further!
  1. Do you provide a superior customer experience? If you ‘shopped’ your business, would you want to buy from it? Do your customers receive their products and services as ordered and in good quality/ condition? On-time? Quicker than the competition? Do you allow for easy returns? Hopefully you answered yes to each of these. We’ve found that this solely achieves a base level of customer service. Thus, the question becomes, “What are you doing to go over and beyond to make your customer compelled to return to you?”.
  1. Are you referable? First, people buy from people; not companies. Are you people referable? The #1 strategy to increase demand is referrals. No matter whether we are talking about a manufacturer, distributor, transportation partner or service organization, referrals can generate more business than any other method. Just as much as we enjoy buying the latest technology based on the referrals from our friends, the people working at companies also refer. When is the last time you attended an industry event or conferred with local CEOs? You better believe business gets done based on word of mouth.
  1. What can you take over for your customer? We have found that whether the industry is aerospace and defense, food and beverage, building products or healthcare products, there are opportunities to take over tasks for your customer. One common and prevalent one is to figure out what your customer needs at each of their branches/facilities and keep them replenished so that they have the ‘right’ inventory at the ‘right’ place at the ‘right’ time. We see this as gaining relevance.  Distributed inventory is becoming an essential element of the end-to-end supply chain plan as customers expect Amazon-like service and will find someone else if you cannot meet their needs.

When at PaperPak, we won supplier of the year for two years in a row with our #1 healthcare products customer because we implemented vendor managed inventory and were able to maximize their service levels while minimizing their inventory levels (cash tied up throughout their system). It didn’t hurt that we also grew the business by partnering further with them while reducing our costs and inventory levels as well. Have you thought about taking a request from a customer and turning it into increased demand for you?

Our most successful clients are thinking about these types of strategies to increase and manage demand. Why not spend a few minutes to listen to the expert panel and walk away with a few insights? If you’d like an expert to assess your situation to partner with you to achieve these types of results, contact us.

Did you like this article?  Continue reading on this topic:

The Strongest Link in Your Supply Chain

UGG Founder, the Amazon Effect in Healthcare & Why Demand is Key 



Should I Move?

July 9th, 2018

Our clients frequently call with questions such as:

  1.  Should we renew our lease?
  2.  Should we move to a lower cost area?
  3.  Should we move to a lower cost state?
  4.  What considerations should we think about when evaluating our manufacturing and logistics network?
  5.  Should we outsource?

Thus, we thought it would be prudent to address some questions and themes that should be evaluated from a strategic point-of-view when discussing supply chain network assessments.  

Let’s start by saying that our top clients begin THINKING about these topics several years in advance. Similar to selling a business, it isn’t the best plan to evaluate whether to renew a lease at the last minute or to be forced into a particular partner or location because you started preparing “too late”.   

Instead, why not think ahead….

  1.  Where are your customers?  – As much as we all want to reduce costs especially in today’s Amazonian environment, we also need to remember that customers expect rapid deliveries, change their mind frequently (and expect agility) and desire easy returns.  Thus, where are you located in comparison to your customers?
  2. What are your customers’ expectations?  – Lead times. Personalized service.  Return policies. Vendor managed inventory.  Future forecasts. What will they expect a year from now?  Are you already planning for these needs?
  3.  Where are your suppliers?  – Similar to your customers, it is important to consider where your suppliers are located as well.  Do you receive product from the ports? If so, what volume is related to the ports?
  4.  What access do you have to people? – We evaluated Nevada for one of our clients. However, when we talked with local contacts to estimate building / lease costs, we also discovered that as low as the overhead might be, freight aside, there were no people.  Tesla had absorbed them all and there were requests to supply people from Southern CA to support current workloads. People can certainly be relevant!
  5.  What type of freight partners/ rates are in place? –  No matter how close you might be to your customer, freight can add up – and, more importantly, delays to your customer are VERY costly (lost business, charge backs from customers such as Walmart, ill will and more).  Just because you have carriers with your current situation, it does NOT mean that will be true with your new situation. Freight is tight and rates are going up! And, remember last mile considerations are complex. Last mile. Last minute!
  6. What type of transportation network is required to support your business?  – In addition to freight considerations, will you need to think about parcel, rail, ocean freight, and other modes of transportation?  Or should you be considering these options?
  7.  What inventory levels are built into your network?  – Inventory = cash tied up.  

There is quite a bit more to think about than solely a cost cutting exercise.  Most clients call due to concerns about cost – as important as cost is, taking the strategic / high-level view can ensure your service, total cost (including hidden costs) and cash flow are maximized.  

Have you started thinking ahead?  If you are interested in our newly upgraded service offering in response to the Amazon Effect of warehousing/ supply chain network assessments, contact us.