Archive for May, 2014

Nespresso: Brand, Convenience, and the Effect on Price

Saturday, May 31st, 2014

It is widely known that Nestlé has created an impressive success story with Nespresso. Today, we’ll take a look at the impact of a strong brand—plus convenience—on price and (in-this-case-inevitable) profits.

OK, calculator at the ready.

  • After a pronounced rise in prices on the coffee market since the beginning of 2014, the cost per kilogram of coffee beans on the commodities market stands today (3/14/2014) at about $4.41.
  • Today (3/14/2014) on its home page, Tchibo is advertising a sale on its “fine-mild” blend: $10.38 per kilogram.
  • The “New York” coffee blend that we at Mandat purchase: about $42.00 per kilogram.

Now to Nespresso.

  • A single pod costs some where between 51 cents and 54 cents.
  • In each pod, there are about five grams of coffee. So, a kilogram would fill 200 pods.
  • According to Adam Riese, that comes to between $102 and $108 per kilogram. That’s a factor of ten compared to the Tchibo offer and still a factor of 2.5 against the “New York” blend.
  • In other words, for the price of a box of ten Nespresso pods, you can buy more than a kilogram of green coffee in South America.

Not bad.

We discuss with many of our clients the power of a brand on price and the advantages of convenience for price. The next time you find yourself in an executive meeting, bring up the subject of how you use the power of your brand and which convenience-advantages you can create for your customers—to the profit of both parties. You will encounter open doors to your customers. Whether this is also true of your team depends on their readiness to grow.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Growth: When Sales “Has to Do” Something, then Something is Wrong

Friday, May 30th, 2014

Thoughts typically heard in the sales department:

  • “I still have to see this customer today.”
  • “I still have to do this evaluation.”
  • “I have to telephone the customer.”
  • “We have to sell more this year.”

They are, all of them, misguided.

No one “has to do” anything. To say “have to” means that you really don’t want to. It says that you’re doing something, that you think—or know—someone else expects of you, of yourself. “Has to” is passive. “Has to” means that you don’t have your heart and soul in it, that you aren’t committed. “Has to” is dutifulness.

Many people are stuck in “has to” mode. This is disastrous, especially in sales. Because there are other ways:

  • “I’m going to drive over to see this customer today because I would like to do something for him.”
  • “I’ll do that evaluation right this minute.”
  • “I’ll telephone that customer now, so that he’ll know what we have to offer him.”
  • “This year we will create even greater utility and, because of that, automatically increase sales.”

In our growth projects focused on increasing sales performance, we we are on the lookout for such nuances. If a salesperson is in “has to” mode, then perhaps—as we often see—the entire sales team is stuck there, and either the sales approach is wrong or, more probably, the sales manager is ineffective. Either is fixable.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Mandat Growth Tip of the Day: Self-Worth

Thursday, May 29th, 2014

In my mentoring and personal-coaching sessions, which I supervise myself, questions always come up that lead back to the same theme: your sense of your own self-worth.

Why is it that experienced, successful, seasoned individuals lack the courage to take the next step toward growth, to telephone a customer, to call an employee to account, to deliver a speech, to remind someone of a mutual agreement that he has seemingly broken?

The answer: the specter of rejection.

Aside from the fact that you can never exactly foretell the response (i.e., the reaction) and that anticipating a response is unfair, there is rejection-anxiety—which is usually unfounded, anyway. So what, if the next step toward growth happens to go awry? What happens if the customer says “no,” if the the worker being called to account has a different opinion and dissents, if the speech fails to please everyone in the audience?

Correct. Nothing.

The biggest bottleneck on development is your sense of your own self-worth. The good news: you can do something about it.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

“Experience” Land Rover: The Impact of Sales on the Impression of a Brand

Wednesday, May 28th, 2014

I am (or was) interested in a new Range Rover. On our quest, my wife and I experienced the following as we, accompanied by our dog, casually dressed in dog-friendly clothes, and me unshaven stopped by two Land Rover dealers that happened to be on one of our routes.

Dealer 1: A prestigious dealership that had the word “premium” worked into its name. There were a few vehicles outside, but no Range Rover. Only a couple of RR Sports and an Evoque. I went into the huge showroom. Empty. Not a single automobile. There was, however, a sales office. Inside was a salesman, who looked up reluctantly as I introduced myself I told him that I wanted to buy a Range Rover and that I was amazed to discover an empty showroom.

  • Salesman (looking me up and down): “Yes, the vehicles are all “over there.” There’s a sale going on.
  • Me: “All of them ‘over there’??”
  • Salesman: “Just so. What are you interested in? An Evoque?”
  • Me: “A classic Range Rover.”
  • Salesman: “A Sport?”
  • Me: “A classic Range Rover!”
  • Salesman (looking me over again, in disbelief): “Our demonstrator is out. I don’t have that model here. Delivery takes nine months.”
  • Me: “Thanks.”

End of conversation.

The next dealer:

  • Me: “Good afternoon, I’m Guido Quelle and I’m interested in a Range Rover.”
  • Salesman: “Hello, my name is . . . and that is most convenient because I sell Range Rovers.
  • Me: “What a coincidence.”

We both laugh. We leave the showroom and head for the lot. The salesman greets my wife with a handshake.

The conversation continues pleasantly. The salesman takes seriously my amazement at the delivery time, but there’s nothing he can do about it. Besides that, the new, extended version currently has delivery time of three years (!), about which he himself is not particularly ecstatic. He would be happy to arrange for a demonstrator, but he couldn’t change the delivery time.

We departed on good terms—a good conversation. Three guesses as to where I’ll shop for a Range Rover next time, when delivery times once again become reasonable.

Lessons:

  1. For a brand, the “front line” is decisive. The first salesman damaged the Landrover brand; the second one made up for it.
  2. Range Rover offers an example of what happens when being unprepared for success damages the brand, in this case because of unreasonable delivery times. In any case, I won’t be ordering an RR.
  3. Never let yourself be controlled by appearances—never. Moreover, instruct your sales department not to make judgments based on appearances. Even people in casual clothing can pay for a car, a watch, a piece of jewelry, or a house.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Mandat Growth Tip of the Day—Stay Tuned!

Monday, May 26th, 2014

Today I emphasize once again the topic “stay tuned.” When you are convinced of something, when you absolutely think that something is right, and yet you see that small successes gradually come to a stop, then keep at it.

That’s obvious? Certainly not. It’s all too common to fall quickly into a rut. We are so often attracted to new things, which suddenly seem more important, allowing good intentions go by the board altogether—with the result that, in the end, nothing gets done right.

Consider well what you are doing, and then devote yourself to that. Resist the temptation to do everything under the sun. Everything that can be thought of can be done. Correct. But not everything that can be done, should be done.

Also stay tuned here, because the Mandat Growth Tip of the Day, with an ever-increasing number of fans, will continue to appear.

By the way: If you look at the list of categories at right, you will find a link that takes you to all Growth Tips of the Day, in succession, with a single click. These tips alone offer an immense benefit, not to mention all the other posts on this blog so far.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Guido’s Personal View: Should Everyone Share (Equally) in the Profits? No!

Saturday, May 24th, 2014

Whenever things are going well for big companies—automobile manufacturers in particular—special payments for performance make news: 8,140 euros for technicians at BMW; 8,200 euros for employees at Porsche; 2,541 euros at Daimler; 6,900 euros at Audi; 6,200 euros at VW—the list goes on.

Of course, that’s great for the workers. Yet, each worker probably did not achieve as much as every other. It doesn’t help that there is no consideration of hours worked by each individual, as at Porsche. It is not unreasonable to assume that, at Porsche, Daimler, Audi, and all the other companies that distribute lump “profit sharing” or “bonuses,” there are some who do more and others who do less. But when everyone receives the same premium, then it also goes to those who exerted themselves less, who accomplished less, and who perhaps were more often ill.

That is not only not fair, this device is also likely to increase resentment. It is similar to the situation in school or in college when some participants in a project are indeed present, but they sit back and watch the world go by, while others work hard toward the intended goal, day-in and day-out. Afterward, if all of them get the same grade because the teacher or professor is making it easy for himself, then that is unfair. And it doesn’t help to use the team concept as an excuse. Moreover, salaries under this arrangement tend to please unions, against which cookie-cutter profit sharing is not an intelligent management tool. It would be better to let high-achievers have a disproportionately large share. In any case, the less-effective receive a base salary—not all that low in the automobile industry—for which you should expect at least a some results. Or am I mistaken? Admittedly, things would become a little more complicated, because it requires individual treatment, and thus greater effort from management.

But leveling down has never been an engine for growth.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

“It’s Miller Time, Let’s Have a Bud”—It’s Not Enough to be First.

Friday, May 23rd, 2014

As our Canadian colleague and friend told me, the Miller brewery created “Miller time” in an ad campaign much noticed at the time—a Miller beer as reward after a stressful day. “If you’ve got the time, we’ve got the beer.” A grandiose concept for the industry. “Miller time” was born. Unfortunately, Anheuser-Busch (A-B) wasn’t exactly asleep, because then came: “For all you do, this Bud’s for You.” A-B’s strength in the beer market gained its slogan gained even wider prominence at the time. Analysts quipped that it actually had to mean: “It’s Miller Time, let’s have a Bud.” A branding disaster.

It’s just not enough to be first. It is more important—and more difficult—to remain first. People sometimes ask market leaders how they have succeeded in remaining the market leader over the years. We get no answers such as these:

  • “We did the same thing, only more often and more quickly.”
  • “We started a large-scale sales offensive.”
  • “We simply always copied others.”

Market leaders with a long-term view of themselves reinvent themselves, dismantle things that aren’t working before others do so, and they are definitely not the cuddly sort. They never rest. Never. The not only dominate the market, they define it. Someone to whom that doesn’t appeal would be better off not trying to be a market leader at all.

Postcript: There is an outstanding article about Miller and A-B (“Busch Family Builds a Name”) in the Milwaukee Journal of 10/30/1988. You can find it on the Web.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Mandat Growth Tip of the Day—Do You Overestimate Your Competitors?

Wednesday, May 21st, 2014

In growth projects with our clients, we observe time and again that most businesses are able to monitor their competition more-or-less effectively. Occasionally, this leads to peculiarities: The competitor’s every step is noted, every action reviewed for potential applicability to the business doing the monitoring. Entire talk shows revolve around the competition.

What is readily overlooked—but which we can evaluate through observation and experience—is that competitors are often thoroughly overvalued. Ultimately, you can’t always see behind the curtain, and very often, things in front of the curtain look fantastic. After a short time, even former employees of your competitor offer little in the way of insider information.

Working with our clients, we counter competition-monitoring with growth-intelligence. Focus your strengths on the marketplace, not on the competition. Don’t be a copycat; forge bravely onward.

Is that what you’re doing? Or do you think less of yourself than you should?

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

“So, You’re Going to Set My Business on a Path to Profitable Growth?”

Tuesday, May 20th, 2014

The opening of a recent conversation with a potential client: “Professor Quelle, I have already heard quite a bit about you, among other things one of your speeches. So, you’re going to set my Business on a path to profitable growth?” – Me: “No, YOU do that.” A pause. Laughter. A lively discussion ensued.

This potential client had recognized the difference immediately. It’s not the consultant—and it shouldn’t be the consultant—who implements changes in the client’s company. Such steps have to come out of the company itself. We help companies to follow a different path. We impart necessary capabilities and skills. We guard against taking steps that, in our experience, regularly lead people astray. We see things in the company that otherwise are not seen or cannot be seen. We supervise the implementation. But the implementation itself must come from within. Otherwise, the entire concept will be built on sand.

Too many consultants regularly overrate themselves, and too many consultants are retained as overpaid advisers, day after day, for years. The impact of a good, experienced consultant lies in multiplication, in boosting the available energy, and in building know-how—not in taking over routine work. Clients should not become dependent on a consultant.

Growth consulting, as we understand it, is to translate our knowing into your doing.
And by the way, that potential client at the top of this post? He did indeed become a new Mandat client.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Mandat Growth Tip of the Day: Keep Your Promises

Monday, May 19th, 2014

There is a guiding principle that is recited time and again—even in the relevant trade literature—when the topic is satisfying your customers: “Say p.m., deliver a.m.” Promise afternoon delivery, but get it there in the morning. Or: Deliver more (or better) than you promised.

That proposition is nonsense.

It’s not a matter of delivering earlier, since that can be just as inconvenient as delivering too late. It’s also not about promising less than you are capable of. Likewise, it’s not about rendering free services that possibly—in most cases—won’t be valued. The crux of the matter is to agree with the customer on a date, to make him a promise, and then to keep it.

Then if you still have a small surprise ready, something that keeps you in the mind of you customer (which must, however, be used in moderation), all well and good. But the following still basically applies:

“Say p.m., deliver p.m.”

 
© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.