Tag Archives: sales promotion

Ok, I’m convinced – technology alone can’t do customer service!

5 Sep
Vimbar Promo

Vimbar Promo

I am a big proponent of technology. By education, then a large-ish part of work, and ofcourse just by being a modern urban consumer, I interact with and appreciate it all the time. Having said that, there are times when I wish that it were possible to find that optimal mix of “human” vs “technology” in our day to day dealings.

In an earlier post, I had actually argued that one needs better technology to enable better customer service. This one is almost a contradiction.

I don’t do rant posts generally. This one may look like a rant – and it’s not really (not high enough stakes I guess), it’s just disappointment that even a company I really like and admire, with a winner promo, gets the “last mile” fulfilment wrong! 😦 (See another earlier post on Customer Service and man vs. machine, which has another example of last mile not working)

Background: A popular dishwash brand recently ran a promo – recognising that dishwashing in India is generally done by domestic helpers, who all now have prepaid mobile phones (India has anywhere from 3/4 of a billion to 900 million mobile subscriptions – roughly 70 – 75% of total pop, and 95% of these are pre-paid). The promo essentially offered 10/- mobile recharge – with varying degrees of certainty, depending on pack sizes. So, the 10/- bar had 1 in 3 probability of winning, and the larger ones had everyone winning.

I picked this up, and the delight on both my helpers’ faces when I explained the scheme to them was to be seen to be believed! They got very excited and ripped open one of the 12 packs I had bought after understanding from me how the scheme worked. They turned the wrapper inside out/ left and right/ asked me to do the same….no unique code anywhere! Ripped open a couple more packs – same result. Big disappointment! So, I got the consumer care mail id from the pack, and wrote in my problem. First time ever, actually! The mail trail post that is self explanatory!

Happy Consumers

Happy Consumers

August 29, 2014 9:02:58 AM:
ME:
Hi,
I bought the 10/- vim bar which showed the 10/- recharge scheme. Bought 12 – thinking would give it to my domestic help.
She got HUGELY excited – so its a cool scheme 🙂 But, we couldn’t find the code – the pack said, Find code inside and then call the number. But, scratching the pack doesnt reveal a number – there is no number embossed on the bar itself (which is what I had expected), and there isnt anything printed on the inside of the pack – neither was there any slip or something with the number.
Would you please let me know where the number is supposed to be? I guess I can go to a retailer to find out – but since I shop most often at a supermarket, not sure the sales guys will know abt it…
THanks much
Regards

August 29, 2014 9:16:17
ME: (In response to very prompt email that came from care center)
Given below
On Aug 29, 2014, at 9:03 AM, wrote:
Dear Consumer,
Thank you for contacting the Levercare team. Your query is important to us and will be dealt with one of our team member within the next 48 hours. Kindly note your reference number 4001957190 as an acknowledgement of your email and quote this for all further communications.
If your query is related to one of our product, we request you to provide us with the below details such that we can help resolve the query better.

1) Name with Surname : Sangita Joshi
2) Contact Details (mobile / land line) : xxxyyyy
3) Complete Address : mmmnnn
4) Product Details (name, variant & size) : Vim Bar – 10/-
5) Batch Code of the Product (number stamped on the back / base of the product) : xxxyyyy
6) With a full description of your query: I bought the 10/- vim bar which showed the 10/- recharge scheme.
Bought 6 – thinking would give it to my domestic help……

September 1, 2014 3:17:01 PM
ME again, in response to email in string below!
Doesn’t look like you have read the actual query 😦
On Aug 30, 2014, at 5:08 PM, wrote:

Dear Sir/Madam,
Thank you for contacting Consumer Care cell of Hindustan Unilever Limited.
Kindly provide me the following details to log your complain:
Your Mobile Number :
Missed Call number dialled :
Date & Time of Entry :
Mobile Number Portability :
Service Provider :

THEM:
September 3, 2014 4:46:29 PM
Dear Sangita,
Thank you for contacting Consumer Care cell of Hindustan Unilever Limited.
To help us investigate this matter further, we need this information from you. Could you please email us back with the following information?
Your Mobile Number :
Missed Call number dialled :
Date & Time of Entry :
Mobile Number Portability :
Service Provider :

ME: No action! What do you expect! It looked like getting into an endless loop, and I don’t really have the desire or the time to keep following up.

Lesson learnt: Automation will only achieve so much – you need at some point in time to escalate to the next level, which I assume is actual – human – people! (To be fair to the guys, maybe their business logic does escalate – but after another round of complaints – I don’t know/ am not willing to find out!)

The underlying business issue here is that of correct segmentation/ tiering of the customer – which then allows the organisation to respond to the customers per importance/ urgency. It’s the criticality vs. doability matrix. So, at first level, assign the cheaper technology options, but build in intelligence (context) and then response mechansims such that you are able to identify the increased attention (or not) that you need to provide the customer. In absence of this, you have disappointment/ disillusionment, maybe disinterest in future purchases! (I will for sure never pick up the 12 bars I did together – and my helpers may even switch brands the next time they go grocery shopping for me!)

I think great recent examples of human aided (what else, roll eyes…) customer service were as seen by Amazon and Netflix ! Truly commendable!

My ex business partner Debjani Deb has recently built this really cool product that does exactly the above – but for in mobile app support! Her company ZineOne essentially tiers app users by context and criticality, and helps organisations therefore offer appropriate levels of customer service to their customers. (Think how frustrating it is in the mobile app world, when you are looking to undertake a real time transaction, say book movie tickets HERE and NOW, and have the app crash on you! If you are stuck in a traffic jam just outside the movie hall, you NEED to purchase that ticket RIGHT THEN! A customer service response even 3 hours later will not help you, AND will lose revenue for the movie company! ZineOne’s product helps the booking app detect that your situation is critical and needs escalation – thus improving overall customer experience! Love it!)

Coming back to my slower/ less time critical Packaged Goods industry, my helper did find the unique code in another bar, called the number, (see, I really liked that the company had thought enough about their target audience to say “give missed call, and you will get a call back!”) got the return call, answered the survey, AND found out that she was the unlucky 66%. This end of the fulfillment was really nicely done – she loved the importance of receiving the call, of punching out numbers for the survey and the ease of the whole exercise.

So, the “marketing/ sales promotion” guys had done their job well – the customer care people just didn’t get their act together quickly enough!

Another common organisational anomaly!

As for me, I ended up buying some recharges for my 2 girls just to get them over their disappointment – so, no big deal 🙂

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Multi Channel Marketing – Distribution Expansion or Cannibalisation

25 Aug

Bricks and Mortar Retail

My young nephew Dhruv came home very agitated the other night. He is planner and brand manager in charge of the store experience of a leading lifestyle brand. They were running a promo and he had spent many hours planning for the activation – he is a geek, so has devised simple but interesting models for inventory optimization, repricing etc.

Problem – in classical copybook style, he had planned that all “unique”, limited stock, special merchandise would be sold at their own retail showrooms during their heavily advertised promo. Makes sense, right? This is where you plan your retail experience, where you keep your best trained storefront people, where you spend megabucks on displays and merchandising.

What happened — yes, you all know it! 2 days before the activation was to hit the market, he figured that the dealer network had already booked all of it, and before he could say “activate….”, that inventory had all vanished!

Gives rise to classical undercutting!

This is a common problem in all dealer network sales systems, specially in India. Long ago, when I was leading area sales for Mattel toys in one of the toughest markets in the North of India, we kinda had the same problem. There was a dominant “wholesale” market in the center of town, and one fat cat distributor who supplied to those guys. Because the wholesalers bought in bulk, they got higher slab discounts – infact, all the the distributor kept for himself was a small margin. The rest of the city got supplied by other distributors, and since the retailers were smaller, they got no/ lesser trade discounts. Prime ground for channel conflict. Many retailers, who anyway visited the wholesale market for purchases of other/ less well distributed products would then get our merchandise cheaper at the wholesalers, leaving their distributors high and dry. This ugliness climaxed one fine day, when we had invited all distributors over for a meet and greet, and many of them almost came to blows!

Barbie Wall of Pink

(We did resolve this – and fairly innovatively too! But it took great guts and a strong belief in the power of our brand’s consumer pull to implement the strategy! We essentially cut down the slab discount mandates to retailers – and made the distributors accountable and penalizable for any contraventions! Would this have meant a reduction in revenues? Yes, a temporary dip – but our theory was that given the fact that we were selling a branded product in a largely unbranded products’ market, anyway, our retailers stocked our products only as the “hook”. Also, kind of following a not-price-led-but-brand-led version of the bait and switch tactic, they always attempted to switch the customer to a non branded – higher margin product that relied on trade push and therefore incentivized trade heavily to execute! Which meant, that all sales that we were seeing of our products were actually happening DESPITE the retailers, and not BECAUSE of them! That was the strength of our brand! Hence, crossing our fingers, we took the HUGE trade discount rationalisation step, which almost made history in trade sales!)

Coming back to channel conflict – my husband was ranting about this recently in another context. Attempting to invest some of our money in some bonds (or whatever), he asked the relationship manager of the bank what percentage interest we would get. (remember, we are so called ‘HNI’ so we merit a relationship manager who, btw, calls me everyday to give annoying snippets like – NIFTY has crashed/ the blasted ruppe is at 65 blah blah…). Imagine his disgust when the RM quoted him a rate that was – hold your breath – LOWER than that quoted on the bank’s website!!!!! (That poor RM i think didn’t get sleep that night since he was probably nursing a wounded ear – post the blasting that Manoj gave him!)

This online sales or “own store” sales vs dealer/ brick and mortar sales is a true conundrum.

Kind of rubs off on marketing as well maybe. The biggest thing that brands and companies nowadays are trying to achieve, is Multi Channel Marketing. ( we saw many RFPs on precisely this task last year). This is particularly relevant in the digital world – so, your offline presence needs to be synched to each of your digital avatars – your website/ blog/ forum presences/ social networking pages or channels. Since this is still fairly new, most brands are at the entry level of figuring this out – which largely means making sure that the visual identity in each channel is more or less similar (not as easy as it sounds – since most of these channels evolved at different times, and were probably executed by different departments within the company).

But, the true test of, and resolution to this is when you can remember the main reason behind having different channels – just greater/ higher reach. You know your customer now doesn’t have the will, or the need to – try too hard to get what she wants. So, you have to go where your customer is! This is true of the offline/ bricks and mortar space and of course online. And of course, different segments on your customers will go to different places – that is after all, the raison d-etre of distribution! So, you expand/ diversify/ have multiple avatars. Then the real way to avoid conflict is – differentiate your offering! Have merchandise as well as communication specific to each channel/ that suits the channel’s peculiarities and also that segment of your consumer that visits that channel. So, LinkedIn needs to have a more professional orientation, while Facebook can be/ is gimmicky/ polls and freebies…Dhruv’s own store needed the one off/ special merchandise because consumers come there expecting the widest range, NOT the most common!

The dichotomy though – how do you standardize visual identities/ simplify SKU hierarchies/ rationalize pricing while at the same time customizing offerings for every channel??? The answer – you do a bit of both! Have visual identities that cue the same stuff, but adapt to the channel – but DO differentiate the offerings for different channels – respect your channel – there is a reason why it is different – recognize that difference! Only then will your channel give you love back!

conflict resolution

StartUp Dilemma 4 – Pricing; OR How to Make Sure You Get Full-ish Value For Your Product/ Service

4 Apr

B2B StartUp pricing

Was reading a blog a couple days ago – this is a consultant who is rightly advising folks to never sell their services for free. As a corollary, one of the 2 newspapers we take, had a front page story on Infosys’ altered pricing strategy. (the other newspaper had a headline on how women now menopause in their 20s – you can see why I perused the Infy article with far greater interest :)).

Brought me to a big dilemma we faced as a start-up – how to price/ how to get client to value your product or service enough/ can you raise price of a service one you set a benchmark to it.

Infact, when we got acquired that was one of the first strategic tasks the new management set before us – raise your cash ring/ increase your profitability/ get us better EBITDA – (as if we didn’t know we needed to do it :))

The issue is – when you just start off, you ofcourse want to acquire clients – this is true whether you have a product or a service. You in general either have a slightly differentiated product/ service – so yours is better/ faster/ cheaper/ does more things than before – or your product/ service is doing something that’s very revolutionary/ disruptive – i.e. no one has done it before. In the first case, the client may be more or less satisfied with their incumbent provider – and if they don’t have an incumbent provider – they have not been convinced of the need for your product/ service. In the second case, if no one has ever done this before, they again either don’t need it, or will not believe that you can do it.

In all cases, the proof of the pudding to a certain extent will lie in the eating. So, you WILL need to introduce some element of promotional pricing – whether it be packaged as a beta client who is pretty much using yr product for free – but in this case atleast with attendant benefits that accrue to u; or introductory offer/ trial offer. Once your client likes your product, or service, you work next at making it more and more indispensable to her – and then I guess raise the price. This is why shampoos offer free satches/ food companies offer free tastings (I LOVE to visit supermarkets etc on weekends only because of all the yummy free food 🙂 – my kids are now as bad as I am/was!). In a related way it also why Gillette prices razors low, and blades are where they skim the cream. But trial/ sample has been an entry strategy for FMCG products for a long time.

food tasting

Talking of betas, when we were trying to develop an NLP engine for our Social Media platform, we contracted another start up to develop it for us – we were in a slightly “4-yr-old-is-bigger-than-1-yr-old” type of “elder brother” syndrome fashion, their beta customer. I think we got a LOT of value out of them – just as they got a LOT of thinking out of us. And yes, despite having got them (or them having got us) to a point of really good results that we felt we could use in our platform, we never ever allowed them to raise their prices on us! Talk about arm twisting!

So how can you apply “sampling pricing” to B2B products/ services. We had a way around it – for our service which was ongoing – needed everyday/ every week or every month, and therefore could have annuity type engagements, we offered a 3 day/ 1 week trial – for that trial time period, we wd give our clients a taste of the service – we worked it like the full service. Our conversion rates for trials were very high – hence, our sales teams had a great weapon in their armory. Of course, the few instances it backfired on us was when the client needed that ‘essential” service ONLY for that week and took advantage of the trial – but these were fewer. The success of the conversaion also lay on the fact that the targeting and sales pitch for even the free trial had to be very careful – the client had to have “skin in the game” – they needed to invest time and energy going through our output and feeding us back – everyday. When that didn’t happen, we knew the trial wouldn’t convert into an ongoing engagement.

Where this did not work however, was when the purchase was likely to be one time – so a piece of research on a specific problem say. This piece of work, once executed, would not be done again – if you gave it free, you essentially had a huge opportunity cost in not being to make money from that product/ service again.

And thus here is where we had the typical start-up problem – in a bid to convince our client/ to get them to start becoming a client/ and to prove to them we could do this, we would invariably end up pricing low – way lower than the true value of the output was. (What decided true value – good question – benchmark what top of the market guy would charge for comparable output – if you have no benchmarks, get proxies. If completely unheralded category – figure out how much its worth it to the client – what is the “cost of abstinence”) Client would buy/ LOVE the results – but then in their mind set the price band at that “low” ballpark. So that future requests came at the same ballpark (hey – u guys charged me 50K lst time, how can u say this is 100K now!) And that wd be a vicious cycle – made much worse when you realized that the same client had switched jobs, and at the new company – good news – wanted you to come and bid for a project; bad news – remembered you had charged the low/ breakeven price the last time and then weren’t able to jack it up.

In a product, the scenario is easier – specially if u sell a licence version, you can threaten to cut off licence/ revoke passwords etc once hooked (that’s why it is generally more profitable to run a product company – apart from the fact that you make one product and sell it multiple times, you also know that once your client has your product, cost of switching is high, and your licence/ royalty fees goes on for a long time) – so you could even have an escalating price menu. (not if you are beta though – as evinced by our NLP vendor situation)

So, coming back to the dilemma yes or no to “free/ trial” price? My answer – actually I don’t have a great one (given that even after acquisition we struggled with this). But, I can enumerate scenarios in which it makes sense to sell free trials/ price low:

Product_Life_Cycle

a) Evangelized product – You need to prove the very efficacy of the product category – in PLC terms, its a category at the introduction stage (you milk it at growth and early maturity – by late maturity you are in the Infosys state – fighting to uphold revenues/ market shares in a commoditized environment)

b) Recurring service – like FMCG/ our daily reporting service, the use cycle is short/ frequent, once bought it will need to be bought again. So, you can “bait” the client (not traditional “bait and switch” usage here i might add) with examples of your work, and then withdraw the service if they don’t pay.

c) Competitive market – When you don’t really have a clear differentiator (well, ideally then you don’t have a business being a startup 🙂 ) in the idea – maybe only in the execution of it, or in the commercial structuring; you give the client a chance to “eat the pudding” for the proof of the eating

d) Large potential client – entry in your roster

In most of these scenarios, you have to be clear you are stating upfront that this is trial pricing for a limited time period only – maybe you even use artefacts like price cards per wish list but give stated/ obvious doscounts for stated/ obvious benefits.

Reminds me of an old boss Rajeev saying (for a very different product category) – when would you advertise your price – we are talking mainstream advertising for a semi durable product – a) either when you have a really low priced product – so u want to say “lowest price/ unbelievably low price”; or, when you have a really high priced one – and the price then is part of the indicator of the value of your product – so, like a lot of the posh/ snooty real estate projects now say – “if you cant pay over a million dollars, don’t even think about looking at this villa housing project!” In either case, your price is making a statement!

Read also an old interview about the 5 Rs. )(10 cents now) price point and its utility for FMCG products in India – I think this has become 10 Rs. now actually)

Having said that, when it comes to the crunch – i.e., the fight between getting revenues on yr ticker board vs getting higher commissions for higher sales (kind of like the “singles vs. sixers” problem in cricket) – it takes guts n balls to not remember the few additional salaries you will be able to pay with whatever the client is willing to give you; and really dig your heels in for the true value of your service!

It is a brave entrepreneur who manages to get his/her wish list price even 30% of the time with the first few clients 🙂 – so, if you manage it, kudos! And if you don’t, try try again 🙂

Sales Promotion vs. Trade Marketing; Paying vs. Incentivizing; and the Power of Relationship in Sales

25 Mar

dealer display

As I entered my grocery shop yesterday, I saw what used to be bread and butter (pun intended) for me a couple decade ago – but a sight I hadn’t seen in a while. It was a “merchandiser”/ “sales rep” clicking away at a very nice end cap shelf display – the brand in question was Kelloggs. Clearly this was either a display contest – designed to have participating retailers give up some of their precious shelf space up to a brand in a bid to enhance impulse purchase – the payoff being, like a lottery, the possibility that they win a prize and therefore money and more importantly prestige; or was “bought shelf space”, more the norm, but a fair drag on the brands’ trade marketing/ sales promo expenses.

But that’s not the story – the story was the action of the retailer personnel immediately after the merchandiser type finished clicking – they immediately got down to restoring the end cap to its usual position – this time with some nuts/ dry fruits (depending on where you are reading this ☺ – english is a funny language isn’t it? or maybe american is… )

So, either the Nuts guy had payed more money, but the retailer wanted to participate in the contest; or the retailer was scamming both companies – greedy pig (but hey, he’s not running a business for charity ☺ ); or the nuts guy had payed more money, and the sales rep/ merchandiser had prevailed upon the retailer to “just put up the display so I can show my bosses” (remember, depending on the company’s scheme – he either gets money or prestige too!) . All scenarios are likely, but for a low margin branded product that relies more on the “pull” created by advertising/ branding than the “push” created by the retailer actively promoting its brand, it is probably the last one that is applicable.

Reminded me of my years in trade sales years ago – with Leo Mattel – a joint venture company that sold toys – more a “semi durable” category. So while there was an “impulse” element to purchase sometimes, it was also equally pre meditated sales (say for gifts); and certainly purchase occasions were not too frequent/ replacement cycles were large. I used to tour the Delhi market with a young “sales rep” on my scooter – this guy was BIG – 6 feetish, heavy – and hence my arms and shoulders always ached whenever I took him around. He was also, and I hate to sound prejudiced, but its true, blessed with one of the ugliest faces I’ve ever had the fortune to see. But every retailer that he took me to – had ONLY nice things to say about young Chakrapani – “Ma’am, please do not remove this guy from our sales beat” – basically the guy was SO good at customer service, and the retailers – an admittedly tough breed in new Delhi – found him so endearing in his mannerisms, that as one guy told me – Ma’am, I have to only look at Chakrapani’s face, and I can NOT say no to him ☺. So, Chakrapani would have done what my Kellogg’s sales rep in M.K Ahmed was doing – but he would have prevailed upon the retailer to keep the display on for longer. Sorely on the basis of his relationship!

Having said that, in an impulse purchase item, its not really a bad thing to have a front display for even a few minutes – atleast for those few minutes, the brand has grabbed eye balls! Its like when a regional sales manager in the then Gillette told the then CEO as he complimented the sales team on an excellent field visit, “but you do know that these have all been window dressed for your arrival, right?” Pradeep gave a hearty guffaw and said – yes of course, but for the 2 – 3 days that this window dressing is up, more people will tend to buy our products than they would have otherwise! And true enough, even in the less than half hour that I saw action on the Kellogg’s display, 3 ladies were fingering the K for Kelloggs boxes, and I saw atleast 2 sales being made right in front of me at the checkout!

So, yes, the relationship is very important in sales, the money tradeoff while important will not ensure action necessarily – after all, the next brand may come in and offer more money! A sales guy needs to be building those relationships at all points. This is true whether you are selling Kelloggs and Razors, or Engineering services and tech products –

As Vrinda, one of our sales people in EmPower told me, the true test of my rolodex is if when I leave this company and go to another, I can call every name here and ask them to try my new product/ services, and they will say yes! (the equivalent in the FMCG world is Balbir, a rambunctious sales guy telling me – you are truly a powerful sales manager if every retailer on your field trip greets you with cashews ☺ – nuts anyone?

For a POV on the “other side” of the coin – the dealer salesman, read this old article of mine here