Tag Archive: 80/20

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



Boston & Expanding Your Thinking

May 17th, 2018

I've Been Thinking

Last week, I spent a few days in Boston at a consulting convention to expand my thinking on consulting so that I can continually provide more value to clients (which is always spurred on by seeing new scenery like the Boston sites below).  

While at the convention, my business partner and I also launched our newly upgraded and expanded value of our new venture, the Society for the Advancement of Consulting that provides value to consultants and entrepreneurs.  When I agreed to take this role on, I had no idea the value it would bring to my consulting practice with expanded thinking.   

 

 

 

 

 

We have not only strategized on growth strategies which are quite applicable for my clients but we have also expanded our horizons in building a scalable, profitable, lean infrastructure so that the 80/20 of the processes will be seamlessly sustainable once the foundation is put in place.   We have also combined different strengths quite productively for win-win results. I’m looking forward to applying these additional ideas and principles with my clients as the appropriate situations arise!

One tip to implement this week:
Have you thought about how to expand your thinking?  A first good step would be to take a step back and think about ways to expand your thinking.  It is quite easy to get stuck inside your current reality. Consider some ways to deliberately push the envelope.

For example, should you invite someone who is quite different from you to brainstorm?  I have gained some interesting and unexpected insights by partnering with someone new.

Should you attend a different event you wouldn’t typically attend and deliberately set out to meet a few new people and ask them about a trending topic?  Since I was in the limelight explaining this newly enhanced consulting society, I met many people I wouldn’t have met otherwise.

Can you ask your customers and suppliers for ideas? How about trade associations? After all, that is part of the point of this consulting society within our particular field.  What about you?

 



Do You Really Support Empowerment?

March 28th, 2017
empowerment

To be an effective leader oftentimes means empowering employees to make changes and decisions to help customers even if those decisions don’t align with yours.

The 80/20 of business success stems directly from leadership. The best leaders can make even the worst-performing teams excel and, unfortunately, the weakest leaders can drag down even the best of teams. A few questions to ponder include:

1. Does your culture encourage empowerment? Regardless of what you say, do people believe they will be rewarded for empowering employees?

2. Do your managers jump to answer questions or give their employees a chance to shine?

3. Do you communicate empowerment but would get upset if your employee made an empowered decision that created a month-end shipping crisis?

4. Do your employees understand the guidelines within which they can make an empowered decision?

5. Are you willing to live with and vocally support an empowered decision that doesn’t align with how you would have handled the situation?

 

Did you like this article? Continue reading on how to Profit Through People:

Empower Your People to Grow 

Develop a Talent Edge 

 

 



Forget Data Cleanup and Find a Measure to Start NOW!

January 17th, 2017

Are you mired in data cleanup and not focused on measures that can immediately help you? Stop searching for the “right” data lever and look for measures to track and improve processes.

If you have the systems to measure your ideal metric, go for it but don’t let it become an excuse! Find one that will measure progress and start immediately!

For example, in one of our clients, not only were the run rates incorrect but they were wildly different for similar items which would make planning an utter nightmare!  However, there are still ways to measure progress and plan. Find a metric that won’t change and stick to it. In this case, we used earned standard hours, and we are able to measure improvements in the metric. Of course, as data is cleaned up, we should put better metrics in place but it doesn’t have to hold up progress! And we were able to plan to the expected earned standard hours as well. All is solved to an 80/20 standpoint which is all that is needed.

This type of scenario has come up on multiple occasions – actually almost every client has some sort of situation that fits in this mold (the only question is how significant). It could be that measuring inventory levels is challenging because the system reports aren’t set up correctly. In this case, it could be that you count pallet rows or something else that is visible and easy. It could be that your system doesn’t support run rates effectively (unfortunately that was true with one client). In this case, we found a manual process to keep the load visible while storing information in the system.

What is in common in all these examples is to start immediately with what you have and find a way to make progress. It certainly doesn’t sound like rocket science but it drives results. If it was common, so many of our clients wouldn’t make significant progress once we find the “right lever” to pull, similar to these situations.

Did you like this article? Continue reading on how to become a Systems Pragmatist:

Uncommon Common Sense Project Management   

The Value of CRM

 



Start planning now to achieve year-end results with critical projects

August 29th, 2013
Priorities, a must in business

Nothing is more critical to your results than good planning, prioritizing, and follow-up.

While looking toward the end of Q3 and the start of planning for 2014, wouldn’t it be nice to achieve year-end results with critical projects?  As many companies and leaders get lost in the holidays, it is an opportunity for those who stay focused on the key priorities. By no means should you forget the holidays and thanking your people for a good year; however, if you channel your efforts on the critical few, you could not only end the year on a positive note but also accelerate project results in time for year-end.

There are several keys to success in delivering project results; however, one simple yet secret weapon is follow-up.  The best plans are useless without follow through and follow-up. I’ve found it quite amazing the number of highly paid, intelligent leaders that do not value or do not make the time to follow-up. Why spend millions of dollars developing plans if you don’t plan to put in the work to make sure they occur?  So what are a few tips to ensure results occur?  1) Plan.  2) Prioritize.  3) Follow-up.

1.     Plan:  First, develop a simple plan.  What needs to be done?  By who?  When?  What support is required?  It doesn’t have to be fancy or use the latest technology (a scrap piece of paper with action items will likely suffice). This will provide the structure for your follow-up.  In my experience across hundreds of projects in multiple industries and geographies, working a simple list is the 80/20 of success.

2.     Prioritize:  Prioritize your follow-up. It isn’t necessary to follow-up on everything. If there is one common mistake in today’s new normal business environment, it is getting caught in an endless sea of tasks in a survival mode.  Instead of going down that rabbit hole, think about what’s most important.  What can have the largest impact on your project between now and the end of the year? Next, follow up on only those priority tasks; for example, the critical path or the A priorities.  If you follow up on only the tasks that are key, the people related to those tasks will intuitively realize the implied importance and prioritize accordingly.

Additionally, the more you are able to explain why the specific tasks are important, the more the people responsible for the tasks will understand and value them themselves. On the other hand, if you followed up on every task, it would just become a nuisance, and you’d likely be ignored.

3.     Follow-up:  Think function & not form. It doesn’t matter whether you follow-up via email, phone, a fancy software or whatever. What matters is that you follow-up. You will achieve the best results if you change your follow-up style to the person you are following up with.

For example, if you are following up with someone who reads email voraciously but doesn’t typically talk on the phone, send an urgent email. On the other hand, if you are following up with someone who enjoys talking with people (regardless of whether he/she has email), pick up the phone.

When you follow up, make sure to follow up in advance of the due date on critical tasks and critical path items. This gives the person an opportunity to remember and plan for the task. I’ve found that 99% of the people will complete the task with this type of follow-up, whereas, without the follow-up, I might receive a 50% completion ratio, mainly due to conflicting priorities and busy schedules.

It isn’t complex, expensive or requires capital investment to follow-up, it just requires a bit of energy, yet, it yields significant results. Why not close out the year with your project team celebrating a significant “win”?

Additional Reading:

Project Failure: How to  Avoid Top Causes

Best Laid Plans: Turning Strategy Into Action Throughout Your Organization