Right Selfishness Quotient? - how selfishness can compromise your network response…

If you are in the business of persuading others via networking (know anyone who is not?) then perhaps it is time to check your ‘selfishness quotient’ as an indicator of possible low responsiveness?

In other words, what you give (free) should always exceed your receipts by a factor of 10… i.e. at any point in time there should be 90% giving vs.10% response…scarey!

Having sorted your inputting/outputting, a sure way to improve the odds is to check your Linkedin contacts and delete those who only allow you access to ‘shared’ contacts -  the ultimate indicator of selfishness?

This will at least ensure that your remaining network contains individuals that are into a bit of give-and-take, with the right encouragement...

For (free!) guidelines on Optimising your Networking see KamLibrary

E-comparing prices, like-with-like...?

Yesterday’s top NamNews item on Mobile Food-price Checks indicates that shoppers increasingly want to know how food prices compare at point-of-sale.

To be precise, they are seeking a true like-with-like comparison of Prices, thus leaving them free to evaluate Product performance, Presentation and Place, in order to complete their decision to purchase.

The issue for suppliers and retailers is whether the product or brand can stand the comparison…

In other words, in a true like-with-like comparison of the four Ps, would the competitor’s product win ‘hands down’?

In which case, we can but jeopardise long term equity and credibility by making a direct comparison more difficult. Instead we should perhaps use our energy to objectively assess all category members vs. real consumer need, and then re-engineer our product offering, stripping out all redundant attributes, in order to provide a better match with that need in terms of value for money, compared with alternatives available.

Eventually, this open comparison will drive price indication and consumer choice at point-of-sale, with e-comparison merely accelerating and amplifying the process….

Breaking the Rules in Supermarket Banking

The succession of own-goals by the traditional Big Four banks and daily revelations of fresh abuses of trust, have provided unprecedented opportunities for supermarket banks to grow market share in financial services...
However, keeping that share will depend on breaking the following self-destruct rules established by traditional providers:

• Hook ‘em in and ‘abandon’ them within the mix: great introductory deals for new customer and then revert to uncompetitive terms
• Exploit habit: Most people assume that their salaries will automatically appear in their bank accounts, direct debits will be paid on time and they can withdraw their own money from a cashpoint as required
• Inertia optimisation: make every move complicated in order to reinforce a perception of being held captive
• Establish standards-in-common with rivals to ensure a move elsewhere is not worth the trouble (collusion? See LIBOR)
• Avoid the personal touch via use of retro-IT automation, all geared to re-inforce the above
• Reduce comparability of offerings and exploit the customer’s numerical dyslexia
• Establish performance reward-mechanisms that operate out-of-phase with actual results
• Ignore the threat of efficient online everything
• Target the un-savvy consumer, forgetting  that all consumers are savvy, given the right help and encouragement
• Forget the basics, focus on cross-selling before establishing and deserving trust…
• Remember the customer is never right…

Easy? 
But what if the above rules are a pre-requisite of successful (i.e. profitable ) high street banking?
In other words, perhaps a whole new business model is required using customer-centric operations, dedicated to meeting shopper-needs and transparent, defensible and competitive prices, where proof of repeat business, in retrospect, becomes the only basis for reward of all stakeholders…
In which case supermarkets start with most of the aces already in their hands…

Winning by numbers: how performance analysis is transforming sport, and negotiation?

The July issue of Wired features a 4-page article on how video-analysis using Dartfish, a video-based software program, is helping Olympic standard champions improve their game.

In elite sports, being the most talented is no longer enough; top athletes also have to ensure they are the better prepared. They understand that their only sustainable advantage is to learn and improve faster than their opponents. The technology used by performance analysts allows them to measure every force, dissect every movement and time every action with absolute precision. That feedback allows athletes to find areas for improvement and aids the learning of new skills.

Application in sport
Applied to sports as diverse as squash, sailing, cycling and boxing, its use in improving skills in Taek won do, a Korean martial art suggests that this method of skill development might be applicable in fine-tuning negotiation skills in the NAM-Buyer relationship.

Use in negotiation
Incorporating video in a live session with the buyer, although desirable, is not feasible...
Realistically, this type of negotiation analysis is best used in-house, using real upcoming deals planned for major customers, with fellow NAMs and colleagues from Marketing, Finance, and  Production, all role-reversing key stakeholders in the supplier-retailer mix. The sessions should incorporate real numbers, ongoing trade issues and reflect the toughest scenarios anticipated in each live-deal negotiation.

Optimising analysis
Analysis should be constructive and rigorous, with each team-member exploring the recording from their job-perspective, assessing both verbal and non-verbal language, incorporating cost & value from each party’s perspective, together with ultimate impact of the deal on supplier and retailers P&Ls.


A bit (but only a bit) like role-playing of old, except for the live bullets and unprecedented downside of coming second best to an increasingly powerful buyer… 

Obviously, the use of the package in live negotiation might prove to be a step too far with even the most indulgent of buyers, give current levels of negotiating skills.

Besides which, who wants buyers keeping pace with your skill development in these unprecedented times?

Tesco’s UK Growth Strategy ‘On hold’ to Focus on Global Expansion?

Could the retailer’s "unprecedented" step of shelving advanced plans to open UK stores, as it focuses on improving its estate and opening smaller stores, be an acknowledgement that maintaining its current UK share and developing its global business will optimise Tesco’s return on investment in the long term?

The problem of dominance
Essentially, when a retailer reaches 25% market share, especially in a politically sensitive category like food, then they invariably become the focus of attacks in terms of alleged abuse of power. When the share exceeds 25%, everyone from farmers, suppliers, shoppers, politicians, stockmarket and media then have a means of putting a ‘name‘ to a complaint.
Eventually, the resources required to manage the resulting ‘defensive mode’ result in diminishing returns at local level, and then begin to undermine a retailer’s global strategies.

Tesco as a mass retailer
With 30+% share of food retailing in the UK, Tesco began to redefine itself as a mass retailer, translating its market share into a current share of 12% of ACV, a share well short of the potentially troublesome 25%... This allowed the company to continue to open large spaces, seeking growth in non-food goods and services.
However, it would appear that a combination of the global cutback in consumer spending, especially in non-foods, and the increasing expertise of rival retailers lead to an unprecedented profit warning, prompting a change in strategy.

Supplier trade strategies
Suppliers now need two distinct Tesco trade strategies:

• UK: Helping Tesco to sell more of their existing products, to existing users, in existing stores, all formats, especially 40,000+ sq ft. in return for 100% zero-defect compliance and fair-share dealing…
• Global: Helping Tesco as per the UK, in countries where the retailer has already achieved 25% market share.   In other countries, Tesco needs help in attracting more new users, using the pulling power of well-known brands, with increased focus on shopper-marketing to reduce/neutralise the temptation to switch-sell private label, all in exchange for 100% zero-defect compliance and fair-share dealing.

Opportunity or Threat?
An unprecedented window is now available for those suppliers that can define and implement a truly global Tesco strategy. However, like all good windows, the opportunity is transient and also available to the competition.

Moreover, ad hoc, uncoordinated and localised initiatives will too easily translate opportunity into threat in dealing with what is still potentially the world’s most productive trade partner…

Farmers Escalate Milk Price-Cuts Protest

The impact of the price cuts ‘amounts to a combined profit warning for the overwhelming majority of dairy farmers in this country’ and reports indicate that supermarkets are to be targeted by blockade-protests from farmers. In some cases, given the fact that cows need milking daily, farmers plan to distribute the undelivered milk free-of-charge outside supermarkets.

In fact, in 2009 continental farmers resorted to more extreme measures such as spraying three day’s supply of unused milk onto fields and at the police.

A call to action
Yesterday, an unprecedented meeting of farming unions called for the immediate reversal of milk price cuts imposed on UK farmers since 1 April. The NFU chaired the meeting of leaders from NFU Scotland, NFU Cymru, Tenant Farmers Association (TFA) and Farmers for Action who came together in an industry show of strength after a catastrophic three months for the sector.

The representatives called for all milk price cuts imposed on farmers since 1 April to be restored by 1 August. They also plan a crisis summit in London on Wednesday 11 July.

Impact on consumer-retailer-supplier relationship
As savvy consumers, we need to run the numbers and realise that constant pressure on shelf-prices pushes back up the supply chain and in the case of clothing can eventually end with child labour abuses in third world countries. In a similar way, relentless pressure on milk prices can result in farmers going bust.

As savvy retailers, we need to run the numbers to ensure that in attempting to meet real consumer-needs, on-shelf availability is not traded off against the need for competitive pricing.

As savvy suppliers, we need to run the numbers to ensure that the total-offer-package meets consumer need better than available competition. In other words, we need to strip back any aspect of Product, Presentation and Place that may be superfluous to consumer need, and sell at a Price that represents better value than the competition.

Going forward
We then need be able to apply a similar numbers-based rationale in assembling a needs-based trade package that enables us to negotiate ‘fair-share’ deals with trade-partner retailers. These are retailers that can appreciate, and accommodate, the realities of each stage of the demand-supply chain in running efficient and effective routes to savvy consumers, in an open, needs-based market environment, offering a package that represents better value than the competition…..

All else is detail.

Economies of scale: Customers Looking For Savings From Suppliers

Yesterday’s NamNews’ item on Morrisons’ alleged demands for £500k savings from some suppliers produced our top visitor-count for the day.  
However, the issue is not whether larger quantities mean greater savings, but whether the discount demanded by the buyer matches the savings made by the supplier.

'Economies of Scale'

As you know, there are many potential sources of economies of scale, depending on the company and category in question, including:

- spreading administrative overheads over a bigger operation/quantities

- purchasing power to get better deals from suppliers of raw materials, packaging, etc

- lower costs in manufacturing - e.g. if longer runs result in lower costs per unit produced

- greater delivery quantities leading to lower distribution costs

- cross selling synergies

Any such savings will obviously depend upon your category and factory capacity/asset-utilisation levels.

The incremental sales route to fair-share negotiation

However, either way, the ‘incremental sale’ calculation allows suppliers to approach the problem from a more productive angle…

In other words, if a customer demands £500k cost-price reduction from a supplier netting 7% on the business with that customer, a ‘back-of-envelope’ calculation says the supplier needs incremental sales of £7.1m to cover the cost (i.e. £500k/7 x 100), unless you can identify and measure some real scale savings, and reduce the incremental sales requirement appropriately.

The basis of your costing-model

Any credible negotiation stance means that you will need to reveal the basis of your costing-model ( i.e. even tougher negotiation with your colleagues?) in order to be able to quantify and argue with the buyer that there is a shortfall between the actual savings and the discount demanded, an additional discount that will not realistically be covered by the anticipated incremental sales. 

Quantifying in this way may result in something approaching a fair-share solution..

Simply saying no is not an option

Q1. Why not substitute your figures and see how much extra you need to sell in order to break-even on the new deal?

Q2. Some might argue that explaining scale economies to a customer is not the job of a NAM/KAM. If so, please explain to us mere earthlings why the global financial crisis is diminishing, rather than enriching, the scope of the job…

Bankers & Politicians, the remaining ‘trust’ evaporates?

Given the latest global LIBOR banking scandal, with politicians playing belated catch-up, the one certainty is that savvy consumers are becoming more entrenched in their determination never to outsource their product-buying decision-making to third parties like suppliers and retailers, ever again. Apart from the ‘obvious’ irreversible damage to the City and traditional banking brands (and unprecedented opportunities for the Co-op bank, Tesco-bank and other retailers that carry little banking baggage. They simply need the skill to count reliably and meet consumer needs) this new ‘unprecedented turmoil means that suppliers have to increasingly deal, and be seen to deal, in business reality.

A wake-up call to end all wake-up calls?

This current wake-up call from 30 years of credit-fuelled demand has already lasted four years (!) and as a result we are embarked upon 10-15 years of flat-line growth, to be overseen and driven by increasingly savvy consumers, who will be satisfied with nothing less than demonstrable value for money…a new culture that is spreading back up the supply-chain…with de-stocking simply one symptom.

With EU unemployment at 15%, rising to 25% in the age segments that matter, consumers, suppliers, retailers and whole countries deleveraging (i.e. using money to pay down debt rather than investing/spending), there will simply be little or no basis for real growth, anywhere, for a long, long time.

The new business reality

This is the new business reality…an opportunity for anyone prepared to face up to it…

In fact, in the current climate business success, and even survival, is about being able to optimise reality.  Indeed, if you do not face up to reality in business, others will do it for you…  Hence the reason why bankers and politicians gradually increase their influence on a faltering business until they eventually officiate in its liquidation. And the LIBOR crisis is currently demonstrating the reliability and trustworthiness of both…

Like never before, reality now counts, bigtime, and the responsibility for dealing in reality is now in your hands, where it belongs, and should be kept…

Q: Is this really the responsibility of NAMs & KAMs?