This time around, I decided to go for NSRCEL's live streaming option via UStream, rather than lose 2 hours of travel time toward IIM-B and back. Turned out that actually going there would have been better. Streaming connectivity was very poor. On the up-side, there was a lot of knowledge I could gather anyway (as you see below), it saved some travel time and I could type my notes into my computer in real-time.
Today's session by Prof.Ramesh Venkateswaran was what I believe is one of the most important lessons that a CEO or a sales and marketing person should learn about business.
Perception vs reality
In tennis, Goran Vanesevic of 2001 Wimbeldon was a wildcard entry and there was just a 4 point difference when he beat Patrick Rafter. 4 points out of 304 points!
When you are talking about world class competition, there is no virtually no difference between you and your competition.
The international competition difference between top brands is 0.001% when you compare them in terms of price and features.
When a consumer looks at alternatives, they have pretty much the same choice everywhere. Rewards are not linked to your companies capability or potential. Whether it's a billion dollar company or a small one, there is no difference to a customer. It's a commodity world. You have to survive and succeed in this market. But we still think "this does not apply to me".
Example: In order to buy car worth Rs.6 lakh, you'd expect people to take a rational decision. The professor created a chart to compare cars of that price range, and he was surprised that the difference between cars of that price range was just 1%.
He asked an acquaintance what made her buy her Ford Accent at that price. The answer he received was shocking and was a revelation into how the consumer thinks. She said "We bought the car because it had very cute headlights and because the salesman was damn nice".
Technology has changed our lives but it is now just one more thing in our life. Commodities have been "technologized".
The professor showed us an ad of Sony Vaio being endorsed by Kareena Kapoor (actress). The ad just showed the laptop being available in different colours. No mention of any of the features that the tech guys at Sony would have worked so hard at.
What do you think this ad is about?
No, it's not about an air hostess training institution or about pens or about hospitality services or about nurses.
It's about a dot-matrix printer!!!
This is the market. This is the world today. It doesn't matter what you are doing. You need to keep customers happy and sales people are a necessary evil. Think of what can you do to make your customer's life simple. That's it. You really don't need any of the business concepts or jargon you learn in classes.
Today tech companies are like commodities and simple consumer items and commodities are like tech products.
Ultimately, whichever way you look, the customer is just buying a commodity. How do you survive? Why should a customer choose A vs B. You must have prod quality. Without that you can't succeed.
If you have product quality success is not necessarily guaranteed. If you don't have it failure is guaranteed. What makes the difference?
It's happy customers? Experience makes them happy. Experience is about everything the person goes through when they come in contact with your company.
Amazon CEO says: Today customer experience is everything (70%). Advertisement's are about visibility, but that is only 30%. You don't build a brand by advertising. It's customer experience that builds the brand. Nothing kills a bad product better than good advertising. we are in a world where every idea has already been thought of. It's difficult to be different.
"Customer's trust" is a result of a hundred things, and not the starting point to make a customer happy.
So how do you deliver a good customer experience?
It's simple: What can I do to make the customers life easier? This is your competitive advantage. For B2B, it is in making the business more competitive.
Product strategy
Involves every element of the interaction of the customer and product.
50% people say they stopped doing business with a company because of poor customer service.
86% customers stopped doing business with a company because of bad experience.
The challenge
Some examples
Indian railways example
The professor had always wanted to travel in 1st class AC in Rajdhani. It was more than the air-fare, but one day he decided to travel from Delhi. The coach was tiny and not inviting at all. This set him thinking:
Who is Rajdhani's competitor?
The airlines. So you'd expect certain minimum things in the train, as an airline customer. This was a bad customer experience.
Who is responsible for it?
It's the designers of the train. Not the coach attendant.
The coach attendant cannot do anything about it because of the way it has been designed right from the beginning. You cannot do anything downstream if you do not build experience into the product design. This kind of design-thinking is what Steve Jobs did very well.
Massage parlour example
The professor loves massages. He looked up some numbers on the internet (JustDial) and called up GreenTrends massage parlour on a mobile number at 9:15am. Nobody took the call and nobody called back. Meanwhile, a Malayali named Ganesh (from another massage parlour) calls asking if he was looking for a massage, and gives him an address. At 12pm again, Ganesh calls up to remind him of his appointment. Until now Green Trends hasn't called back.
The professor went for a massage to Ganesh's place for Rs.1200, and after the massage the person offered him some more suggestions and eventually, the professor came out spending out Rs.15000. The professor being a Palghat Iyyer, he says it's very difficult to make him part with money. But still, he spent Rs.15000.
Taxi driver example
This is about a commodity called "a taxi". A taxi driver (Sheikh Ahmed) once just offered a taxi ride to the professor. An illiterate guy without a website or much of technology knowledge. What he did provide, was a very reliable taxi service with SMS'es at every stage of engagement with the customer.
The engagement SMS'es:
He just used a phone to create a reliable service for the professor and he's always on time. Now the professor's whole community uses Sheikh Ahmed.
If you calculate the lifetime value of customer that Sheikh Ahemed has got, you'll notice that he has knocked off more money than the massage parlour guy, and customers are happy!
This is how you look at sales and opportunities.
India post example
There was a letter delivered to the professor, and the envelope just has his name and the pin code mentioned on it. Nothing more than that. The postman does not know him either.
The post office department had every reason and were completely justified to throw that letter into the waste-paper bin, but they didn't. They ensured that it got delivered.
Why did the postman deliver the letter? Does he get a promotion or ESOP or increment? No. He gets kicked around and walks all over the place.
He delivered the letter because it's important for him. Not because it's important to his boss or market share.
Do it to make the customer happy. Not for your annual report or for anything else.
The letter above was one delivered to the professor's wife, and it had the wrong address mentioned on it. See the number of seals on the letter. Would any private company have gone through so much of trouble to get it delivered? If you want business, this is what you should do. It's not about attending sales conferences and networking. You need to want to do everything for the customer, and do it happily.
We deal with a business of dealing with human beings. Sheikh Ahmed the taxi driver had used CRM to the ultimate advantage with just an SMS.
The professor advises that if you are a techie nerd, stick to your computer and stay away from the customer.
Customer response
At your doorstep, when you see a sales person wearing a tie on a Sunday morning. What do you say?
You say: "Whatever you are here to sell, I don't want it". *slams door*
As a sales person, you realize the world doesn't see things the way you do; and then you say "customers are idiots". For some sales people, the customer is a terrible person. You don't see that you are also a customer to someone else. Although when you are a customer, all you see are lousy sales people.
The customers job is not to create hassles for you. The customer wants to solve some problem of his. If you are not contributing to it, you aren't adding value.
Here's a new marketing concept: People aren't buying products. They are buying solutions: What does your product do for me?
It's also about access. Access is not about just delivering. It's about information too. People are not buying price. They will buy only when they see value. Price is about fact. Value is about perception. Facts contribute toward building perception.
What is your job in communicating with the customer? Today the word is "education". Educating the customer with solutions, access, value propositions and promotions.
Jeff Bezos created a practice in Amazon that every time a new feature is proposed by an employee, the narrative should take the shape of a mock press release. The goal was to get employees to distill a pitch into its purest essence to start from something the customer might see.
The professor says historical case studies are useless, because what worked for someone under certain conditions, might not work out for you.
The challenge for startups is to test your product out. Identify target people. People who are willing to try new things and willing to listen to you.
Your job is to shoot the target. Simple. Large companies take an AK-47 and keep shooting randomly. A startup should aim carefully because the bullets are limited and we never get to see the full picture.
Value
What is value? When do you say something or someone has value?
How do you operationalize these in a sales call?
There are tangible and intangible aspects to it.
Value: Shirt purchase example
Let's say you are buying a shirt. When you're quality conscious and brand loyal. When you go to a store and the sales people are joking and chatting with each other and they just point you to a shirt and continue with their chatting, what will you do? You will walk out.
You walk out because you can still get a shirt of that brand from another store. The customer is not losing anything. You go to a few more showrooms, and you go through the same experience.
At this point of time, what exactly is ticking you off?
Behaviour and respect.
Why does it matter if they didn't behave properly? If you think rationally, you'll realize you just went to buy a shirt and you could have bought it without the sales-person's help.
When you're satisfying needs, there is a physical and psychological need to be satisfied. You are paying Rs.2000, not just for the shirt but also for the respect. People at a minimum want to feel important and respected.
That's why the lady paid Rs.6 lakh for the nice car salesman. That's what the Ayurveda massage parlour person and the cab driver did. They made their customer feel important.
Cash, risk and uncertainty are what the customer is giving. You have to be able to measure that.
To put it simply...
...there's the product and the customer.
That's not enough. The product has to fill the customer need fully.
But in the real world, only a part of the circles overlap.
And the professor says that's not value. Not yet.
The reality in life is that there is a competitor.
The competitor adds some value to the customer too. Points "A" and "B" are points of differentiation. The overlap "C" is called a point of parity and not differentiation. Parity won't add value. Differentiation won't add value.
The point you want to remember:
Our sales job objective should be to make "A" much much bigger than "B".
Differentiating
No manager goes out with the intention of failure. But 95% of them fail because there was something unpredictable.
Focus your startup's energy in getting the potential target audience. You can't afford to waste energy in blindly shooting widely and hoping there would be customers.
You may be different but not be a differentiator. The customer sees a differentiator.
Use technology to deliver outstanding customer experience to build relationships and loyalty. use technology for the sake of technology and use it sensibly.
Final objective
The professor showed us a video of a baby on a swing. Whenever the swing moved forward, the baby could see the McDonald's logo through a window, and the baby smiled. When the swing swung backward, the baby could not see the logo and the baby cried briefly until he could see the logo again.
Your final objective is to make the customer to cry (like that baby) when your company is not there to fulfil their task. The services you provide should be so good that they should want to use the services of your company so badly.
The ultimate test of your customer
We were shown a video where a boy goes to a vending machine, inserts a coin into a slot that's just within his reach, to get a Coca-cola can. Then inserts another coin to get another Coca-cola can.
He then keeps both Coca-cola cans on the ground, stands on them to be able to reach a higher coin-slot on the machine, which is for Pepsi. He inserts a coin into the slot, gets a Pepsi and walks away with the Pepsi, and ignores the Coca-cola cans.
More from NRecursions, on startups:
Today's session by Prof.Ramesh Venkateswaran was what I believe is one of the most important lessons that a CEO or a sales and marketing person should learn about business.
Perception vs reality
In tennis, Goran Vanesevic of 2001 Wimbeldon was a wildcard entry and there was just a 4 point difference when he beat Patrick Rafter. 4 points out of 304 points!
When you are talking about world class competition, there is no virtually no difference between you and your competition.
The international competition difference between top brands is 0.001% when you compare them in terms of price and features.
When a consumer looks at alternatives, they have pretty much the same choice everywhere. Rewards are not linked to your companies capability or potential. Whether it's a billion dollar company or a small one, there is no difference to a customer. It's a commodity world. You have to survive and succeed in this market. But we still think "this does not apply to me".
Example: In order to buy car worth Rs.6 lakh, you'd expect people to take a rational decision. The professor created a chart to compare cars of that price range, and he was surprised that the difference between cars of that price range was just 1%.
He asked an acquaintance what made her buy her Ford Accent at that price. The answer he received was shocking and was a revelation into how the consumer thinks. She said "We bought the car because it had very cute headlights and because the salesman was damn nice".
That is the reality of business. 1.8 billion of research that went into the car and a grand announcement of launching the car on the same day in India and Germany, was all ignored by a customer who just went by the niceness of the salesman!
Technology has changed our lives but it is now just one more thing in our life. Commodities have been "technologized".
The professor showed us an ad of Sony Vaio being endorsed by Kareena Kapoor (actress). The ad just showed the laptop being available in different colours. No mention of any of the features that the tech guys at Sony would have worked so hard at.
What do you think this ad is about?
No, it's not about an air hostess training institution or about pens or about hospitality services or about nurses.
It's about a dot-matrix printer!!!
This is the market. This is the world today. It doesn't matter what you are doing. You need to keep customers happy and sales people are a necessary evil. Think of what can you do to make your customer's life simple. That's it. You really don't need any of the business concepts or jargon you learn in classes.
Today tech companies are like commodities and simple consumer items and commodities are like tech products.
Ultimately, whichever way you look, the customer is just buying a commodity. How do you survive? Why should a customer choose A vs B. You must have prod quality. Without that you can't succeed.
If you have product quality success is not necessarily guaranteed. If you don't have it failure is guaranteed. What makes the difference?
It's happy customers? Experience makes them happy. Experience is about everything the person goes through when they come in contact with your company.
Amazon CEO says: Today customer experience is everything (70%). Advertisement's are about visibility, but that is only 30%. You don't build a brand by advertising. It's customer experience that builds the brand. Nothing kills a bad product better than good advertising. we are in a world where every idea has already been thought of. It's difficult to be different.
"Customer's trust" is a result of a hundred things, and not the starting point to make a customer happy.
So how do you deliver a good customer experience?
It's simple: What can I do to make the customers life easier? This is your competitive advantage. For B2B, it is in making the business more competitive.
Experience is everything I go through, right from the time I get to know about your product to the time I dispose of it. It's not always about using the product.
Product strategy
Involves every element of the interaction of the customer and product.
50% people say they stopped doing business with a company because of poor customer service.
86% customers stopped doing business with a company because of bad experience.
The challenge
- How do we stand out?
- Why should the customer choose me?
Some examples
Indian railways example
The professor had always wanted to travel in 1st class AC in Rajdhani. It was more than the air-fare, but one day he decided to travel from Delhi. The coach was tiny and not inviting at all. This set him thinking:
Who is Rajdhani's competitor?
The airlines. So you'd expect certain minimum things in the train, as an airline customer. This was a bad customer experience.
Who is responsible for it?
It's the designers of the train. Not the coach attendant.
The coach attendant cannot do anything about it because of the way it has been designed right from the beginning. You cannot do anything downstream if you do not build experience into the product design. This kind of design-thinking is what Steve Jobs did very well.
Massage parlour example
The professor loves massages. He looked up some numbers on the internet (JustDial) and called up GreenTrends massage parlour on a mobile number at 9:15am. Nobody took the call and nobody called back. Meanwhile, a Malayali named Ganesh (from another massage parlour) calls asking if he was looking for a massage, and gives him an address. At 12pm again, Ganesh calls up to remind him of his appointment. Until now Green Trends hasn't called back.
The professor went for a massage to Ganesh's place for Rs.1200, and after the massage the person offered him some more suggestions and eventually, the professor came out spending out Rs.15000. The professor being a Palghat Iyyer, he says it's very difficult to make him part with money. But still, he spent Rs.15000.
Ganesh's sales pitch did that. He extracted out that much money and the customer was happy. In a place where there are so many other massage parlours, he grabbed an opportunity which wasn't even there for him. GreenTrends on the other hand, lost a lifetime customer. Customers aren't going to come and tell you "please take my money".
Taxi driver example
This is about a commodity called "a taxi". A taxi driver (Sheikh Ahmed) once just offered a taxi ride to the professor. An illiterate guy without a website or much of technology knowledge. What he did provide, was a very reliable taxi service with SMS'es at every stage of engagement with the customer.
The engagement SMS'es:
- Will be at airport at xyz time
- Am waiting at entrance
- Will be at residence tomorrow morning at xyz time
- Will wake you up at xyx time
- Picked up your guest. On our way
- Happy Diwali
- This is to inform you effective.. taxi fares are going up...
- Wake up call
He just used a phone to create a reliable service for the professor and he's always on time. Now the professor's whole community uses Sheikh Ahmed.
If you calculate the lifetime value of customer that Sheikh Ahemed has got, you'll notice that he has knocked off more money than the massage parlour guy, and customers are happy!
This is how you look at sales and opportunities.
India post example
There was a letter delivered to the professor, and the envelope just has his name and the pin code mentioned on it. Nothing more than that. The postman does not know him either.
The post office department had every reason and were completely justified to throw that letter into the waste-paper bin, but they didn't. They ensured that it got delivered.
Why did the postman deliver the letter? Does he get a promotion or ESOP or increment? No. He gets kicked around and walks all over the place.
He delivered the letter because it's important for him. Not because it's important to his boss or market share.
Do it to make the customer happy. Not for your annual report or for anything else.
The letter above was one delivered to the professor's wife, and it had the wrong address mentioned on it. See the number of seals on the letter. Would any private company have gone through so much of trouble to get it delivered? If you want business, this is what you should do. It's not about attending sales conferences and networking. You need to want to do everything for the customer, and do it happily.
We deal with a business of dealing with human beings. Sheikh Ahmed the taxi driver had used CRM to the ultimate advantage with just an SMS.
A man without a smile should not open a shop.
The professor advises that if you are a techie nerd, stick to your computer and stay away from the customer.
Customer response
At your doorstep, when you see a sales person wearing a tie on a Sunday morning. What do you say?
You say: "Whatever you are here to sell, I don't want it". *slams door*
As a sales person, you realize the world doesn't see things the way you do; and then you say "customers are idiots". For some sales people, the customer is a terrible person. You don't see that you are also a customer to someone else. Although when you are a customer, all you see are lousy sales people.
The customers job is not to create hassles for you. The customer wants to solve some problem of his. If you are not contributing to it, you aren't adding value.
Here's a new marketing concept: People aren't buying products. They are buying solutions: What does your product do for me?
It's also about access. Access is not about just delivering. It's about information too. People are not buying price. They will buy only when they see value. Price is about fact. Value is about perception. Facts contribute toward building perception.
What is your job in communicating with the customer? Today the word is "education". Educating the customer with solutions, access, value propositions and promotions.
Jeff Bezos created a practice in Amazon that every time a new feature is proposed by an employee, the narrative should take the shape of a mock press release. The goal was to get employees to distill a pitch into its purest essence to start from something the customer might see.
The professor says historical case studies are useless, because what worked for someone under certain conditions, might not work out for you.
The challenge for startups is to test your product out. Identify target people. People who are willing to try new things and willing to listen to you.
Your job is to shoot the target. Simple. Large companies take an AK-47 and keep shooting randomly. A startup should aim carefully because the bullets are limited and we never get to see the full picture.
Value
What is value? When do you say something or someone has value?
How do you operationalize these in a sales call?
A customer believes that they have got value when they have got more than what they have given. The job of a sales person is to make the customer believe that.
There are tangible and intangible aspects to it.
- Ego
- Risk
- Uncertainty
- Brand
Value: Shirt purchase example
Let's say you are buying a shirt. When you're quality conscious and brand loyal. When you go to a store and the sales people are joking and chatting with each other and they just point you to a shirt and continue with their chatting, what will you do? You will walk out.
You walk out because you can still get a shirt of that brand from another store. The customer is not losing anything. You go to a few more showrooms, and you go through the same experience.
At this point of time, what exactly is ticking you off?
Behaviour and respect.
Why does it matter if they didn't behave properly? If you think rationally, you'll realize you just went to buy a shirt and you could have bought it without the sales-person's help.
When you're satisfying needs, there is a physical and psychological need to be satisfied. You are paying Rs.2000, not just for the shirt but also for the respect. People at a minimum want to feel important and respected.
That's why the lady paid Rs.6 lakh for the nice car salesman. That's what the Ayurveda massage parlour person and the cab driver did. They made their customer feel important.
Cash, risk and uncertainty are what the customer is giving. You have to be able to measure that.
To put it simply...
...there's the product and the customer.
That's not enough. The product has to fill the customer need fully.
But in the real world, only a part of the circles overlap.
And the professor says that's not value. Not yet.
The next definition of selling: I will be successful in sale if I either get the product to do what the customer wants or to get the customer to want it. Without this minimum condition, you don't make the sale.
The reality in life is that there is a competitor.
The competitor adds some value to the customer too. Points "A" and "B" are points of differentiation. The overlap "C" is called a point of parity and not differentiation. Parity won't add value. Differentiation won't add value.
The customer will buy from you only when "A" is larger than "B". This is the fundamental of value.
The point you want to remember:
Value is never in isolation. It's relative to something else. If you don't know what the 'something else' is, you can't create value.
Our sales job objective should be to make "A" much much bigger than "B".
Differentiating
No manager goes out with the intention of failure. But 95% of them fail because there was something unpredictable.
Focus your startup's energy in getting the potential target audience. You can't afford to waste energy in blindly shooting widely and hoping there would be customers.
You may be different but not be a differentiator. The customer sees a differentiator.
Use technology to deliver outstanding customer experience to build relationships and loyalty. use technology for the sake of technology and use it sensibly.
Final objective
The professor showed us a video of a baby on a swing. Whenever the swing moved forward, the baby could see the McDonald's logo through a window, and the baby smiled. When the swing swung backward, the baby could not see the logo and the baby cried briefly until he could see the logo again.
Your final objective is to make the customer to cry (like that baby) when your company is not there to fulfil their task. The services you provide should be so good that they should want to use the services of your company so badly.
The ultimate test of your customer
We were shown a video where a boy goes to a vending machine, inserts a coin into a slot that's just within his reach, to get a Coca-cola can. Then inserts another coin to get another Coca-cola can.
He then keeps both Coca-cola cans on the ground, stands on them to be able to reach a higher coin-slot on the machine, which is for Pepsi. He inserts a coin into the slot, gets a Pepsi and walks away with the Pepsi, and ignores the Coca-cola cans.
More from NRecursions, on startups:
- Effectual marketing for startups
- Leveraging digital media for startups
- Investor relations and ESOP's for startups
- Open source for startups
- Funding for startups
- Analytics for startups
