Flex your right brain

Our last post talked about Dan Pink’s groundbreaking book “A Whole New Mind.”  His premise is that we’ve moved into a new era -- the Conceptual Age -- where people and companies will succeed or fail thanks to right-brained skills like inventiveness, empathy, joyfulness and big-picture thinking. 

Dan isn’t suggesting that left-brained analytical skills aren’t important any more.  It’s just that “L-Directed Thinking” isn't enough to create compelling products and services.  For example, the iPod dominates its category because of its design and how it makes us feel – right-brained attributes.

How can we become more right-brained and create this whole new mind?  Dan lists these six “R-Directed” skills that we should try to master:

1.  Design sense.  In the Conceptual Age, pure functionality isn’t enough to differentiate a product, service or experience.  Functionality is a given.  So these days it’s crucial to incorporate great design as well – that’s what brings pleasure, meaning and beauty to our lives.  

2.  Storytelling.  We’re mired in data, arguments, points and counterpoints.  To rise above the clutter, we need to focus not on pure logic but on telling stories that take people on a meaningful, memorable journey.

3. Symphony.  As routine analytical work is relegated to Asia and automation, we need to build what Dan calls “symphony” --  the ability to synthesize rather than just analyze.  It’s a skill that enables us to see relationships between seemingly unrelated elements so that we can combine them into compelling new ideas.

4. Empathy.  When we’re saturated with information and analytical tools, logic just isn’t enough.  We need to empathize:  understand the feelings of others, recognize what drives and inspires them, and build relationships. 

5. Play.  “Too much sobriety can be bad for your career and worse for your general well-being,” says Dan.  Inject your personal and professional life with laughter and fun!  Plus it’s easier to create stories, build empathy and symphony with a smile on your face. 

6. Meaning.  Most of us are fortunate to have our day-to-day needs covered.  As a result, we have the opportunity to focus on the big picture – purpose, meaning, lofty desires.  We can pursue not just what we need, but what we want – and that’s to add joy and success to our lives. 

Dan devotes a full chapter to each concept – there are lots of great ideas to help you flex your right brain and apply these principles to your work and personal life.  For example, he suggests checking out museums to build your appreciation for design.  (He also claims that an MFA is the new MBA.)

B2C brands have had to master these principles to create ad campaigns that make consumers feel certain ways about their products.  B2C marketers don’t typically talk about functionality, product specifcations, or other dry details.  Instead, they tell stories; they empathize; they use design and words to evoke emotions; they attempt to create meaning. 

If you’ve read this far (!) you’re probably nodding your head about these ideas.  So as a forward-thinking B2B marketer or executive, try applying these six principles to your next marketing program or campaign.  For example:

• Empathize with your prospects.  Understand their human feelings and the real reasons they buy (or shy away from) your product.


• Draw on your powers of “symphony” to come up with wild new creative ideas.


• Develop a story that will resonate with your prospects.


• Take them on a meaningful journey.  Show them that you really know them, help them feel good and see how your product/service can improve their professional lives.


• Incorporate humor and fun into your message.  Business buyers are people too!


• Use design to differentiate.  Make your story look and sound unique, stimulating and beautiful.

If you can incorporate these principles into your marketing programs and campaigns, you can help your company stand out in the Conceptual Age.

But good strategic marketing isn’t just about creative campaigns.  We still need plenty of L-Directed analytical thinking to build processes, crunch numbers and measure our success. 

In fact, most sales & marketing teams don’t have enough left-brained thinkers to fulfill this vision of a “whole new mind.”  So in our next post, we’ll talk about L-Directed skills and processes that help the marketing function truly drive the strategy of a business.

Again, here’s a link to the book.

Technorati tags:  business | marketing | Dan Pink | Whole New Mind | B2B

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A Whole New Mind for Marketing

A friend recently introduced me to Daniel Pink’s A Whole New Mind.  It’s a profound and exciting book and I couldn’t recommend it more.  So I’m writing a series of blog posts to share his ideas and apply them to the world we live in – that of the CEO and marketer in a small-to-midsize company.

First the credits.  Dan is the author of Free Agent Nation, a contributing editor for Wired  and a contributor to the New York Times, Harvard Business Review and Fast Company. 

And now his premise:  The last few decades have belonged to left-brained thinkers – computer programmers, lawyers, MBAs, accountants.  Linear, logical, sequential, analytical thinkers. 

But that time is over.  We’ve moved beyond that Information Age into an era he calls the Conceptual Age.  And in the Conceptual Age, people and companies will succeed or fail thanks to right-brained skills like inventiveness, empathy, joyfulness and big-picture thinking. 

In this era, skills that may once have been considered frivolous are now a competitive necessity for companies.  Logical and linear is now in the passenger seat and creative, high-concept thinking is behind the wheel.

To say his idea is big would be an understatement.  And Dan lays out a very convincing argument.  He points to these three root causes for the shift from the Information Age to the Conceptual Age:

1.  Abundance.  We have everything we need.  Now we have an opportunity to focus on adding meaning to our lives.

2.  Asia.  There are more highly-skilled and trained workers in Asia than the entire population of the U.S.  And they can perform highly-skilled, linear, logical work for 10-20% of the cost.

3.  Automation.  Computers can automate almost any repetitive task and do it more quickly than a human could ever dream. 

U.S. workers and companies who want to thrive in this next economy should ask themselves three tough questions:

1.  Can someone overseas do it more cheaply than I can?

2.  Can a computer do it faster than I can?

3.  Is what I’m offering in demand in an age of abundance?

If our skills, products or services can’t stand up to these three questions, then we’ll suffer in the Conceptual Age.

The good news is that companies and individuals can increase our focus on right-brained aptitudes.  In my next post, I’ll write about the 6 aptitudes that Dan thinks will increasingly guide our lives and careers in the Conceptual Age.  Then I’ll talk about how to apply those aptitudes in your company. 

If you’ve read Pink’s book, what did you think of his arguments?  And have you applied any of his principles to your business?  Please share your thoughts, questions and ideas with our readers!

Also, here’s a link to the book and Dan’s blog.

Technorati tags:  business | marketing | Dan Pink | Whole New Mind | B2B

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Test a new pricing strategy

Our last post about Parker Hannifin’s pricing strategy brought up a lot of great questions from our readers and colleagues.

To recap, Parker Hannifin (a $9 billion company) was struggling with their profit margins, so they modified their pricing strategies. 

They grouped their 800,000 products into categories based on their level of differentiation in the market.  For their most highly differentiated products with little or no competition, they raised prices substantially.  Then they implemented less dramatic increases for more competitive categories.  As a result, they generated an additional $200 million in operating income.

Their story offers a great case study on pricing strategy. But the question we’re hearing is “How do I evaluate whether I can truly increase prices without jeopardizing my sales volume and profitability?”

After all, a price increase can be very risky.  As we all know, when you increase prices, you should expect a drop in sales volume.  But the real question is this:  By how much will that volume rise or fall? 

For example, if you raise prices 10% and your volume drops 20%, you’re in trouble.  But if it only drops 5%, you’ll generate more profit at the higher price point. 

The same is true if you’re lowering prices – if your volume increases at a greater rate than your price cut, you’ll generate more profit at the lower price.

So how can you measure this price sensitivity?  It’s difficult to calculate accurately unless you have plenty of historical price and volume data and an economist on staff. 

However, you can use these eight steps to generate a general estimate and test your new theory before you roll out a new pricing strategy.

1.  Know your value proposition.  If your pricing strategy and value proposition aren’t aligned, you’re contradicting yourself, confusing the market and limiting your opportunities.

2.  Group your products/services into categories:  Commodities, partially differentiated, substantially differentiated, custom.  And remember that your opinion may be different than that of your target market – while you may view your products as “highly” differentiated, they may think “partially.” 

3.  Evaluate your competition for each group of products.  How do your prices compare to those of your competitors? 

For many B2B companies, this step is easier said than done -- you’re less likely to find specific pricing info for your competitors.  If that’s the case, you can try to “secret shop” your competitors, ask prospects for feedback or just estimate a range.

4.  Talk to your sales reps.  If they’re very close to their prospects and customers, they may be able to provide solid estimates. 

Give them a chart and ask them “If our price was X, how many incremental deals do you think you could have won (or lost)?”  Provide 3-5 values for X.

5.  Survey your lost prospects and customers.  As in the previous step, you’re trying to project the number of deals you could have won or lost at different price levels.

You can have your sales reps contact prospects and customers or you can use an independent third party or formal survey.  Your goal is to find out whether they would have bought from you (or whether existing customers would buy more/less) at different price points. 

6. Calculate your total estimated profit at each price point.  First, calculate your total current profit at your existing price(s).

Units sold * (Price – Cost of Goods Sold) = Total current profit

Then look at your surveys and estimates and calculate the number of additional units you could sell (or lose) over the same time period.

(Existing units sold + incremental units sold) * (New price – Cost of Goods Sold) = Total projected profit

7.  Test your theory.  If possible, before you implement a company-wide pricing change, set up a statistically valid test to evaluate your new pricing.

8.  Develop a communication plan.  If you’re raising prices, your sales reps and materials will need to easily overcome any objections they face.  Consider giving existing prospects a window of time to buy at the current price.  And if you’re lowering prices, it’s a great time to plan a major campaign to announce your news.

Know other good resources, case studies on pricing strategy, price elasticity and/or testing?  Add a comment below or send us an email – we’ll share it with our readers.

Technorati tags:  business | marketing | sales | B2B | price

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Distribution channels for services: Big ideas, big payoffs

Last week James talked about the unglamorous but important topic of distribution channels. It’s one of the “4 Ps” (“placement”), but many marketers and smaller companies don’t think about it as often as they should.  And it’s potentially the most important strategy in your arsenal. 

When you sell a physical product, it’s easy to keep distribution strategy and channels at the top of the priority list.  You may have a direct sales team, a network of resellers & VARs, a retail presence, a catalog and/or an e-commerce website.

But what about distribution options for intangibles like services?

Most service firms in the U.S. are small businesses under $1 million in revenue. Many are caught in the E-Myth -- the founders are working in the business with little time to work on the business.  And when you’re stuck in the E-Myth, it’s tough to find time to lead your company to hyper-growth.

For these businesses, a new distribution channel can be just the ticket.  The opportunities may not be obvious, but they’re there when you apply your creativity.

Here are some key questions to get you started:

1. List other products or services your customers use.

• What problem are your customers trying to solve when they buy from you? 


• Are there complementary services or products that come before or after they join you? 


• What else may be on your decisionmaker’s plate at the time they buy from you?

2. Find organizations who already have access to your prospects.  Think broadly about

• Media they consume (online content, podcasts, industry publications, newspapers, etc.)


• Services they subscribe to


• Consultants or vendors they work with


• Companies they buy from regularly


• Organizations they belong to


• Events they attend

The organizations you’ve listed are potential distribution partners or channels for you! 

Here are a few case studies to inspire you as well.

Strategy #1:  Buck tradition

Logoworks uses a non-traditional distribution strategy for their industry with enormous success.

 

There are thousands of graphic designers & firms in every city.  They compete for the same business and it’s difficult to gain leverage over their time. 

Instead of setting up shop and knocking on local doors, Logoworks distributes their design services via the internet.  They use search engine marketing (both organic and paid search), online ad campaigns and ongoing online publicity to gain clients all over the world.  It’s possible for them because they also distribute their product – logo designs – via the web.  

This distribution strategy also gives them a more compelling value proposition:  operational efficiency.  By using a pool of virtual designers, Logoworks is able to provide clients multiple design options at a much lower cost than a traditional firm.

Their internet distribution model has been extremely successful, and this spring, H-P acquired the company.  Why?  H-P wants to use the Logoworks offering as a value-add to their small-business customers.

That’s a smart distribution strategy.

Strategy #2:  Hang out with your customers

Here’s another distribution option: partner with a company whose customers need your service.

Geek Squad

Let’s say you’re launching a new tech support service. You could knock on doors and market your services locally.  Or you could raise millions and spend it on marketing, physical locations and overhead. 

Instead, Geek Squad partnered with Best Buy to offer their services right inside their stores.   When Best Buy sells a computer, customers know that Geek Squad can service it if they have any problems. They even promote the Geek Squad brand in the parking lot.  

 

This partnership was so successful that Best Buy acquired Geek Squad in 2002.

Jigsaw

Companies that create software widgets can find great success partnering with bigger software companies that have a critical mass of users.

Jigsaw founders Jim Fowler and Garth Mouton were a pair of high-tech sales pros frustrated with the amount of time they spent searching for contact information. So they created Jigsaw, an online directory of more than five million business cards.

Now they needed access to salespeople, so they joined Salesforce.com’s App Exchange program, offering their service to any Salesforce user.

Salesforce.com is a major distribution channel for Jigsaw, giving them access to tens of thousands of potential customers.

They’re now one of the 10 top App Exchange applications.

Home Depot

How about a non-technical case study?  Consider all of the vendors who provide service via Home Depot.

When you hand over your credit card for granite countertops, flooring or a new garage door, you don’t have to DIY.  Home Depot will sell you installation services if you need them, but they don’t provide those services directly. 

Instead, they have teams of subcontractors in each market to perform those jobs.  Home Depot is a distribution partner for those contractors, giving them access to a large pool of customers who need their services right now.

Get serious about distribution!

Developing a new distribution strategy, then creating and managing the program can be tough work – particularly if you’re a service company with limited resources.

But if you’re looking for new ways to gain leverage and build your business, take a serious look at your distribution strategy.  You can start small with a single partnership and work up from there. 

Still reading?  I must have hit on something valuable!  How does your company think about distribution?  Have you considered new strategies in the last year?  What’s worked and what hasn’t?  Please share your thoughts in the comment area below.

Technorati tags:  marketing | sales | distribution channels | B2B | business