The talk-ratio in negotiation - optimising scarce time with the buyer

With extending lead-times to gain access to the buyer, and the need to survive over-riding everything, a NAM can be tempted to jeopardise the outcome of a precious buyer-meeting by attempting to monopolise the conversation via a high-intensity monologue, eventually expressing 'hurt' at the buyer's unimaginative  demands for 'the margin'.

This basic mishandling of the session can be avoided by reverting to appropriate use of the 'talk-ratio' at different stages of the meeting. Essentially, relative interventions by seller and buyer should comply with the 30/70, 50/50, 70/30 rule as the meeting progresses through the different phases of beginning, middle and end..

The Beginning: NAM: 30%, Buyer 70%
Having resisted the temptation to unfurl the 200-slide 'presentation', NAMs may realise how little they know about the buyer, and lapse into interrogation-mode. However, time with the buyer is too precious to risk asking for basic facts that should have been researched elsewhere. NAMs should instead focus their 30% of the dialogue on fact-checking and opinion-checking using a mix of open and leading questions, seeking buying signals, and listening to and using the answers...

The Middle: NAM: 50%, Buyer 50%
Phase two should be a shared discussion of the issues, neutralising the objections ('if he ain't objecting, he ain't in the market...') and helping the buyer to buy, using a subtle combination of finance-based adding of value and devaluing of concessions, and testing possible 'need and solution' combinations. In other words, demonstrating a willingness to slice the cake to fit, and enlarging the size of cake only if justified by a willingness to buy more...
Good buyers love this bit...

The End: NAM: 70%, Buyer 30%
If the groundwork has been adequate, then the switch to 70/30 should be natural, and mutually beneficial, as the NAM is allowed to 'take over' the conversation and detail the solution, based upon facts established and agreed in earlier phases, with both parties confident that follow-through will meet, or even exceed expectations...

Time to ignore the flames and try a change of fuel?

Founder of Wikipedia says boring university lectures 'are doomed'

The boring university lecture is going to be the first major casualty of the rise in online learning in higher education, says Wikipedia founder Jimmy Wales in a new BBC article.

The custodian of the world's biggest online encyclopaedia says that unless universities respond to the rising tide of online courses, new major players will emerge to displace them, in the way that Microsoft arrived from nowhere alongside the personal computer.

This highlights the importance of the MOOCs (massive open online courses) that have signed up millions of students, using video-lectures supplemented with interactive information, that can be used at any time on a tablet or laptop.

Wales also suggests the future model of higher education will be to allow students to use recordings of lectures - and to use the teaching time to discuss and develop what students have been watching, .

The Khan Academy
This change in the role of the ‘classroom’ echoes the approach of Sal Khan who set up the Khan Academy, a rich and fascinating online source of over 3,000 videos covering everything from arithmetic to physics, finance, and history and hundreds of skills to practice, all free of charge.

Khan suggests that ‘homework’ should consist of viewing/studying relevant videos, and ‘classroom’ sessions be devoted to practical application and problem solving issues arising from the homework…

Application to NAMs
This is equivalent to pre-workshop distribution of material so that NAMs come to a bespoke workshop ready to apply the process to their categories, customers, competitors and live trade issues, using real ammunition...

(NamNews are currently using this approach to help clients develop and implement finance-based trade strategies, email: bmoore@namnews.com  for details)

The Waitrose effect on house-values: a 'chicken or egg' issue?

According to an article* in The Daily Mail, Savills Estate Agents have examined how the cost of homes with a Waitrose in the same postcode compares to those in the rest of the same county.

The verdict was that the typical price of properties with a nearby branch was 25.3 per cent higher. For example, a home in Amersham, which has a neighbourhood Waitrose, typically costs £456,000, while the average for Buckinghamshire is £360,000. The situation is even more extreme in  London, where a local branch can add 50.3% to average prices....

Obviously 'quality of neighbourhood' comes very high on retailers' shopping lists when searching for new store locations, so it could be said that Waitrose tend to build in neighbourhoods where house prices are already at a premium...a good example of the chicken/egg conundrum often faced by NAMs in their attempts to distinguish cause and effect in the day-job... Either way, as the recession continues, it could be said that grocery sales even in 'Waitrose' areas will become increasingly vulnerable to discounter-appeal, the Aldi effect, eventually resulting in a downward pressure on house prices?

Accordingly, in relating house-price sensitivity to 'outside factors', it could be beneficial to get personal and explore the impact of continuing triple-dip recession (you don't really believe that 0.3% increase represents growth in the economy??) on a NAM's biggest asset...

Taking an investor's approach to house valuation, where a house is deemed to be worth twenty times its annual rental i.e. a 5% yield, the Amersham example at £450k would require a rental of £1,875/month to make it a viable investment.. In other words, it could be said that housing in the UK is overvalued, and in the event of continued economic flat-lining, house prices will eventually fall to a 'proper value'...

In most countries outside the UK & ROI, houses are regarded as homes, places to live, and not investment assets, and their use of a conservative 20x multiplier means they have been less susceptible to housing bubbles...and the consequent impact on spending.

All of this means that there is a potential 'housing-correction' in the UK pipeline that will prolong the flat-line demand, and this 'straight-curve' needs to be factored into NAMs' forecasts, in spite of political re-assurances to the contrary....

It follows that opportunities lie in wait for those NAMs that live in 'reality mode' while others await a return to normal.... 

* Housing prices near Waitrose

Argos squares up for Amazon battle

With like-for-like sales rising by 5.2% - its best performance since 2006 - in the final quarter of its financial year, coupled with a better than expected profit forecast (results due Wednesday 1st May) of £90m, Argos may be on the way back...

However, Argos-watching NAMs may feel that this recovery may be more a reflection of the demise of Jessops and Comet, than improvements in state-of-art retailing expertise...

According to a report in The Telegraph, Argos are planning  to spend £100m in each of the next three years to put the retailer in shape to battle with Amazon by converting its 700 stores into 100 “showrooms” and 600 click & collect sites, and providing advice from customers assistants.  .

The real issue has to be Argos ability to compete on an equal footing with Amazon and increasingly Tesco, a daunting prospect given their head-start in offering a combination of speed, (1-click) service, multi-channel access, pricing, and increasingly click & collect.

Whilst Argos' commitment to the new show-rooming initiative, combined hopefully with high grade store advisors and efficient click & collect, could offer an initial advantage, anything less than state-of-art performance will result in Argos having to fall back on price and range in attempting to grow sales at the expense of two of the leading players in the market.

However, the fundamental issue for Argos and its suppliers has to be its emphasis upon private label, planning to double its current 15% of sales to a third by 2018, in categories where retailer brands are not an obvious choice.

Given that much of Argos success will depend upon brands' collaboration, they may find that supplier NAMs may prefer to work in the heat of the kitchen with Tesco and Amazon, a place where consumers actually come to buy brands...  

How Cinema should be,,,?

Customer engagement at the Komedia Cinema, Brighton
A pointer for cinemas everywhere?

Converting showrooming into buying instore - a proactive role for brands and retailers?

Among those who showroom, two thirds use their phone whilst doing so, providing a major opportunity for brands to interact with consumers via mobile and turn browsers into buyers, at point-of-sale…

TNS’s latest annual Mobile Life study, based on responses from 38,000 people in 43 countries, shows that whilst showrooming is a very real threat, mobile can offer a solution to brands in minimising this risk. 

The study also shows that people are open to engaging with brands whilst in-store, with more than one fifth of smartphone owners keen to receive mobile coupons whilst shopping and a similar proportion interested in apps that help them navigate the store they are in, as they respond to the biggest drivers for showrooming:  reassurance on price and reassurance on suitability....

However, the key for suppliers and retailers is to resist the temptation to alienate via instore information-saturation, whether physical or online... Converting such potential ‘interruption-marketing’ into ‘permission-marketing’ can be achieved by clear announcements – physical signs, audio and online- that free wifi is available to facilitate online comparison, along with e-advice from both the stores site and brand-owners, all accessible from easy-links at point-of-sale, for those that choose to use the facilities….

In other words, retailers need to be encouraged to optimise this physical encounter with a showrooming shopper by getting their consumer-engagement right, making it easier, more convenient and worth a small premium for the potential purchaser to complete the process at that point, rather than giving the almost-completed sale to an online competitor, for a few pennies less…

Meanwhile, brand owners can help by attempting to measure the maximum price-difference that will just about prevent the showrooming shopper from going elsewhere to complete the purchase

Getting it right will benefit all parties…
 

Why the world loves Clarks and its shoes as it nears its 200th anniversary

                                                                                                        pic: Brian Moore
Obviously they make a good shoe, but I have always attributed Clarks’ success to their unique approach to two key factors – their design philosophy and trade management model.

How they design shoes
Essentially, Clarks design shoes from the inside out in terms of starting with a good fit, with appearance coming later. This is in contrast with more stylish continental shoes that start with appearance and work from the outside in, sometimes with unfortunate results in terms of comfort.

As their children - and their shoe requirements - transition to early teens, anyone with teenage daughters- or even grand-daughters - will appreciate the difficulty in persuading them to accept anything even remotely connected with ‘Clarks sandals’

Thus Clarks ‘loses’ the satisfied user for the vital middle years..

However, with age, the increasing need for comfort means that they pick up that same child in her mid-forties, thus realising the remaining life-time value of their users…

Filling the gap between childhood and middle-age has always represented a marketing challenge for Clarks (more on this ‘gap-filling’ and how this family firm has beaten the ‘3-generation’ rule, here)

How they manage the trade
From a retailing point of view, Clarks again have a unique approach. When the new season’s shoe-models have been approved, sufficient quantities are made to facilitate a series of viewings at selected hotels around the country. Shoe retailers are then invited to their nearest venue, are shown the range and are invited to commit on their requirements before leaving the premises… From experience the retailers know there are limited opportunities to go backwards or forwards on order quantities as the season develops.

When all the orders have been received, Clarks buy the leather and manufacture the shoes…

Meanwhile, where have the rest of us all missed a trade-trick, I ask myself….?

Amazon finally flexes its third party advertising muscles

Google knows what people are searching for. Facebook knows what people like and who their friends are. Amazon knows you searched last week for running shoes, but also that you bought a pair a year ago. That kind of information makes a difference, especially for third party advertisers....

How it works
After running ads on its own website for years, the company has taken the first steps toward becoming a true Internet advertising network, using the knowledge garnered from its data to place targeted ads for some of the world's biggest advertisers across thousands of other websites. It buys ad inventory - or online ad space - from content publishers or through exchanges, which are online markets for buying and selling inventory.

Amazon quietly started serving ads on other websites in the fourth quarter of 2010. This part of its business remained un-named until about the middle of last year, when the company formally christened it the Amazon Advertising Platform.

Another $1bn revenue stream for Amazon?
Numberswise, online advertising has 20 to 30 percent profit margins versus less than 5 percent for Amazon's retail business, according to Ben Schachter, an analyst at Macquarie. Moreover, with predictions that Amazon's ad business will hit $1 billion in sales this year, the attractions are obvious. "Amazon is not a retailer anymore, it is the largest behavioural marketing company in the world," said Yaakov Kimelfeld, chief research officer at Kantar Media Compete. "Amazon will be the best positioned to predict whether to buy inventory or not and be the most efficient in this market."

A step closer to 'permission marketing'?
The real potential for advertisers lies in the fact that regular users do not regard 'Amazon' advertising as an intrusion, given the precision of its targeting... It therefore fits well with Godin's philosophy that marketers should obtain permission before advancing to the next step in the purchasing process, in contrast with the 'interruption-marketing' of traditional media. Amazon's approach can be a step forward for advertisers wishing to open a willing dialogue with consumers that want to buy..

The 'superfluous 50%' of advertising....
The Amazon move does not bode well for traditional media. If we take the old advertising maxim: '50% of my advertising is wasted, trouble is, I don't know which half...' literally, it means that advertising impact can be achieved with 50% of the spend, if the waste can be avoided. As a result, the precise targeting based on the Amazon model will mean a significant reduction in advertising expenditure, even if the reduced budgets go to traditional media. However, if speed and flexibility becomes a requirement in optimising real-time purchasing data, then traditional media may again be found wanting... With the reduction in its advertising 'lifeblood', traditional media may have to resort to the 'cover-price' to restore viability, or make a fundamental 'e-assessment' of their ability to meet real consumer need......

The amazonian-advantages for advertisers should go without saying.....