Sales & Operations Must Be Tied at the Hip

A common mistake I see with clients is with their organizational structure, often running their businesses with separated departmental silos.  As an example, which I will focus on this post, they think it is the sales department's job to sell accounts, and the operations department's job to service accounts, with a clear hand-off once the sale is closed, and very little collaboration between the two. That is a big mistake which I will address below. 

Read the rest of this post in Forbes, which I guest authored this week.

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It's Impossible to Maximize Growth and Profitability At the Same Time

It is mathematically impossible to try to maximize growth and profitability at exactly the same time. The math just doesn’t work. The many companies trying to do both could benefit from a reality check. Consider the following.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

For Startup Success, You Need Strategy and Execution

The right recipe for startup success requires an equal mix of: a good strategy or idea, powered by a experienced management team that knows how to execute the plan. If you typically have only one of the key ingredients, your startup won’t succeed. And, in terms of ranking these two critical elements, as I have said before, I would rather bet on an A+ team executing a B+ idea, than a B+ team executing an A+ idea. Building startups is really hard, and the team makes the entire difference. Let’s bring this story to life, and look at two different startup clients that I have worked with at Red Rocket. In these two examples, they were both being powered by first-time CEO’s with limited prior startup experience and they both had equally good ideas in comparable enterprise facing markets.

Read the rest of this post in Forbes, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Customer Service Case Study: A Nightmare at Disneyland!!

The plaque at the entrance of Disneyland in California reads: "Here you leave today, and enter the world of yesterday, tomorrow and fantasy".  The very core of the Disneyland brand has been to take you to that fun and magical place.  Our recent family trip to Disneyland was anything but fun and magical.  It was more a page out of a Freddie Krueger horror story.  And, if Walt Disney could see all the corporate greed for maximizing money making, at the expense of a fun user experience, he would surely be turning in his grave.  Below is a summary of our experience, and lessons for us all to learn for delivering a world-class customer experience (or not!!).

PARKING FAIL

You know you are not off to a good start, when despite arriving an hour before opening, you still have to wait an hour just to park your car.  The flow from the highway exit to the lot was bumper to bumper for about a mile, and when you finally arrived at the pay booth, six lanes merged down to one lane in a chaotic mess.  It was like Disneyland had never had to deal with parking flow issues in their sixty year history before.

FOOT TRAFFIC FLOW FAIL

The average person can walk at around three miles an hour; we were lucky if we were walking one mile an hour.  It was so overcrowded in the park, you felt like you were part of a herd of cattle being lead to the slaughter.  You should never feel like waiting in lines for the rides, was actually a reprieve from the chaos of walking through the park itself.

PARK DESIGN FAIL

Disneyland prides itself on how well-designed its park is, with "invisible" operations behind the scenes.  But, to me, the "visible" part of the park, was very poorly designed to handle large volumes of crowds.  There were so many "pinch points", where a wide walkways narrowed down to a thin walkway, creating crazy bottlenecks.  And, there were many "dead ends", where you needed to reverse direction back through crazy crowds, to get where you thought you were originally heading (based on very poor signage).

WAIT TIMES FAIL

There are around eight main sections of Disneyland, each with a main ride therein.  In a good user experience, in a 9-5 day, you should be able to ride each of the eight main rides in an eight hour day, with no more than an hour wait for any one ride.  Wait times were approaching two hours on many of the rides, which means the visitors were only able to experience around half of the rides offered.  Fun is enjoying the rides, not waiting in lines for the rides.

FAST PASS FAIL

I like the concept of a Fast Pass, to get a set reservation time to avoid a busy line.  But, the fails were many here: (1) you can't set reservations anywhere but the ride area, which means you need to battle crowds and wait in lines just to get your Fast Pass; (2) you are limited to one Fast Pass reservation every two hours, which reasonably means you only get a couple chances to use it per day; and (3) if you don't return in your slotted time, you lose your reservation (and many people were missing their one hour reservation time window because the crowds were so bad to get back to that part of the park in time).

MARCHING BANDS FAIL

I love marching bands as much as anyone, but there is a time and place.  You should not close down the main foot traffic walkways of the park, to accommodate marching bands on the busiest days of the park.  That takes a slow user experience, down to a crawl.  If you want bands, put them on the main stage at the entrance of the park, where they won't impede foot traffic flow during your peak times.

RESTAURANTS FAIL

When it is lunch time, around noon, and you can't get food for your kids until after an hour or two of waiting in long lines, there is a major problem.  And, when you finally get your food, and there are no empty tables for you to sit down and enjoy your meal, that just compounds the problem.  And, when you find the one open restaurant in the park with 20-30 open tables, and you are are turned away because you didn't have a pre-booked reservation (which many people missed due to crowds impeding foot traffic) is just plain stupid.

I understand the Disneyland amusement park experience has been in our country's core DNA since 1955, or over 60 years now.  That is around three generations worth of families that have taken their families to the Magic Kingdom for that break away from reality and to fantasy.  But, when that experience has become more of a nightmare, at the rapidly growing entry cost of $100 per person (and easily double that with parking, food and souvenirs), maybe it is time for the country to have a new family tradition.

Perhaps that is visiting any one of our 59 national parks, where the experience is equally spectacular, the land is plentiful and you won't be cattle-herded up against 65,000 other travelers.  Or, if amusement parks is a must, there are scores of them across the country--take your hard earned money to other parks that better respect your user experience.  For example, we visited Universal Studios in Hollywood, Legoland and the San Diego Zoo that same week we visited Disneyland, and they were delightful in comparison.

Anyway, take these business lessons to heart: (1) don't mis-serve your customers in delivering a poor user experience (regardless of how much money you can make); and (2) don't take your history and customer loyalty for granted (you never know when they will hit their breaking point and take their family and money elsewhere).  Disneyland should have capped their user maximum at a much lower level to preserve a better user experience (even if they needed to raise prices to enable that).

I know I will never go back to Disneyland after this recent experience, and I recommend you don't make the same mistake I made: trusting our once-in-a-lifetime family experience to Disney (did I really just say that??!!).  I am sure Walt and the brand team at Disney are cringing as those very words are leaving my mouth, as it is 100% counter to the brand positioning they are aspiring towards. But, it has become the stark reality, based on the current generation of Disney executives who have forgotten how to put their customers first (not their bottom line).  They may not feel the financial impact in this generation, but they surely will in the next.

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ADDENDUM ADDED 1/13/16:  I have to give credit where credit is due.  I got an unexpected call from Disneyland this week after they read this blog post.  They said I raised a lot of fair points, apologized for the poor experience, acknowledged it was one of their busiest days of the year and told me their team is brainstorming the overcrowding issues to remedy it in the future.  Then, they offered my family five free Park Hopper tickets (a $750 value) to use on our next visit, anytime in the next two years.  That was an unexpected and appreciated offer, and a professional and honest way to treat an upset customer.  Problem is: with my family in Chicago, the odds of flying my family out to Los Angeles a second time in two years is pretty low.  So, I won't be able to take advantage of it.

For future posts, please follow me on Twitter at: @georgedeeb

Lesson #224: When to Take Off the Gloves With Competitors

Let’s face it: every company needs to deal with competition.  You compete on your product offering, your pricing, your customer benefits, etc.  And, for the most part, relationships against competitors, follow some sort of decorum, as best as two competitors can.  You usually speak to your company’s advantages, you keep the pitch factual and you don’t stoop to the level of bad mouthing the competition.  But, your competitors don’t always follow that logic, and oftentimes, they can come out swinging, especially if they are a new entrant in the market trying to knock out the incumbent industry leader.  So, when that happens, you have no choice other than taking off the gloves, and getting your hands dirty.

Competitive Case Study

I wanted to use a case study to help bring this story to life.  One of my Red Rocket clients was a pioneer in their industry, had the largest market share by a wide margin, and was perceived as the best in the market.  This afforded them the ability to charge premium prices and maintain rich margins.  But, a new competitor came along that had one clearly stated goal: to take down the king of the mountain, my client, primarily on a price driven advantage.  And, they would do whatever was necessary to make that happen.

This competitor did not play by normal rules of engagement.  They would price their product at half of market value, trying to steal accounts and get their foot in the door, even if it meant big losses to their bottom line.  They over-inflated the hype around their true product capabilities, which didn’t hurt them during the sales phase (only during the renewal phase when clients would drop them after being disappointed with the reality).  But, even worse, they would completely lie to customers, about my client with ridiculous made-up stories designed to create fear or give the customer a reason to move their business.  That is where I drew the line you should never cross: you just don’t lie in business.

What We Did About It

This is when we started to “take off the gloves” to better defend our turf.  In our RFP responses we would add a section about our competition (in general) and where we saw our strengths vs. other players in the industry, firing away against the weaknesses of our competitor (on a no names basis).  We added client testimonials and reference information of customers that had worked with both companies and had been “bamboozled” by our competitor (again on a no names basis), and came running back to our client.  And, we designed a lower-price point version of our product, to take the pricing discrepancy away. 

The Outcome

And, the good news . . . it worked!!  We finally were able to stop the “bleed”, losing existing clients to this competitor.  And, better yet, we won the next three competitive RFP situations against this competitor with our new and improved pitch.  And, worth adding, we did NOT go to the point of “no holds barred”.  We didn’t call the competitor out by name, we didn’t do it in a negatively intended tone, and most importantly, we did not lie to try and win business!!

In Conclusion

When pitching against competitors, do your best to always take the high road, where you can.  Speak to your strengths without bashing your competition.  You don’t want to have to “take off the gloves” unless you have no other choice.  But, if you are dragged down into one of those ugly situations, as discussed herein, don’t just take the “ass whooping” lying down.  Get in the ring, and punch your competitor right in the mouth (in a way your customer won’t perceive it as you doing it a specific or malicious kind of way). 

When Joe Frazier is pounding away at you, time to bring out your inner Muhammad Ali!!

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #223: Ten Things You Need to Know When Responding to RFPs

If you are in the B2B space, odds are you will need to respond to Requests for Proposals (RFPs) from prospective customers throughout your normal course of business.  The RFP process is typically filled with potential pitfalls along the way.  This post will hopefully help you learn what those pitfalls are, and more importantly, how to avoid them.

1. Understand the Process

RFPs basically lay out all the specific project needs and questions of the customer in one document, which they send out to numerous competing bidders.  From there, the customer will typically narrow down all the submissions to a handful of finalists.  The finalists will be given the opportunity to ask any questions they have, and the customer may also ask additional questions of the finalists, as they compare and contrast the various proposals.  A final proposal is then submitted by the finalists, and the customer selects their winning bidder to move forward with.  This process can take from weeks to months to complete, depending on the size and complexity of the project.  And, expect enterprise customers to have a much more onerous process than SMBs, as that often means a procurement department will be involved (in addition to the business people needing the solution).

2. Make Sure You Are Aware of RFPs in the First Place

You can’t close sales if you are not aware of the RFPs in the first place.  So, you need to identify all prospective customers in your space, and make sure you are on their radar and ask to be included in any of their RFP requests.  Also, oftentimes, bigger companies will engage third party RFP process management companies to run the process for them.  So, uncover those third party companies that are active in your industry, and make sure you get on their radar, as well.

3. Be Prepared for Last Minute Requests, and Tight Deadlines

RFPs can often come in last minute, with a very tight deadline for submission (e.g., around two weeks).  The more complex the project, the tougher it is to pull together a thoughtful response in a short period of time.  For this reason, you should have a template RFP on the shelf, for when the RFP comes in, you have 80% of the standard materials all ready to go, and you can focus on the 20% that needs to be customized for that particular proposal.   Prepare for RFP responses to be a big distraction while they are happening, and the better prepared you are, the less of a distraction it will be.

4. Have a Well-Written and Thoughtful Response

A good response will typically have the following sections: (i) about your company; (ii) what makes you better than competitors; (iii) your specific thoughts on the RFP project, and how you are uniquely qualified to succeed; (iv) answers to any of the customer’s specific questions; (v) your pricing section; and (vi) your happy client references.  And, the response should be visually appealing, with graphic images carrying more weight than dense paragraphs of copy.  Most importantly, talk in the “customer’s voice” and intersperse their logo and images throughout the presentation, so they know you understand their business, and it looks like you put customized work into your response, tailored just for them.

   

5. Don’t Disclose Your “Secret Sauce”

At the same time you are trying to distinguish yourselves from your competitors, be very careful NOT to give away your “secret sauce” in your response.  There are very high odds that the customer will see your unique advantage in your response, and may ask the other bidders if they can do that too.  Which does two things: (a) educates your competitors on what you do; and (b) gives the competitor the chance to say, “sure we can do that”, whether they were or were not planning to in their initial response.

6. Bundle Price Where You Can

The more details you provide in your pricing proposal, the more specific line items the customer can try to negotiate down.  So, as an example, if you are a platform technology vendor, don’t detail pricing for all the various features and functionality in isolation, line by line.  Instead, aggregate pricing for the platform as a whole.  You want to make it is hard as you can for the customer to “turn the screws”, and truly understand your net margin on the project.  Understand, your customers will do everything they can to try and break out the details.  So, tread carefully and dig in where you need to.

7. Don’t Quote Your Lowest Price

Back in Lesson #39, I wrote about the art of negotiation.  As this post suggests, you need to leave the customer room for a “win”.  And, that win typically means letting the procurement department look smart to their boss, by having them negotiate further price savings from the original quote.  So, let’s say you normally like to price your business with a 50% gross margin.  Quote at 60% in the RFP, knowing procurement will be expecting at least a 10% haircut from there during the process.

8. Strategically Leverage the Q&A Process

There are two parts to consider when asking and answering questions during the Q&A process:  (i) protect yourself; and (ii) make life miserable for your competitors.  As for the former, all questions asked and answers answered will normally be shared with all the competing bidders.  So, be careful not to ask any question, where the questions itself, or the answers therefrom, will help educate your competitor on how exactly you do your work, which may be a unique advantage you want to keep secret.  And, on the flipside, if you know you are materially better than your competitors in certain areas desired by the customer, ask questions will that you know your answers will far outshine your competitors.  This is really a fine line to walk; you want to show off your strengths, but not all of your strengths that will give your competitors intelligence.

9. Beware the Procurement Department

There are typically two departments involved in the purchase decision: (i) the business people needing the solution; and (ii) the procurement department negotiating the contract.  The procurement department’s job is to save the company money, and often times, their personal bonuses are tied to the quantity of those savings.  Which means, even if you are the 100% ideal solution for the business people, the procurement department might start “lobbying and biasing” a different solution, if it makes them look smarter to their bosses.  Typically, the business people win out on small price differences, but the procurement department gains a lot more leverage the higher your prices are versus others, even if the business people selected you.  So, make sure you make friends with the procurement team, at the same time you are working the business team, and keep a close eye on your competitors’ pricing.

10. Leverage Back Channels

During the RFP processes, you are typically disqualified if you reach out to the customer during the process, trying to push or promote yourself.  They don’t want to be distracted by numerous bidders while they are trying to do their work.  But, you need intelligence during the process, so you can act on that information before it is too late.  Make sure you have “friendly” people in your back pocket, that are aware of the process and the discussions thereto, but are not directly involved in the process.   For example, let’s say you are pitching a social media technology solution to a brand.  Maybe you are friendly with someone at their social media agency or in their digital marketing team, that are colleagues with the decision makers, and can sniff around for “inside information” on your behalf.  But, be careful, these have to be VERY close friends of yours, where you are sure your intelligence gathering will not make it way back to the customer and disqualify you.

I bet you never realized how many moving pieces are wrapped up in a successful RFP response.   Hopefully, you are better educated on the process, to help you win the next one.

For future posts, please follow me on Twitter at:  @georgedeeb.