Timothy Keiningham, Global Chief Strategy Officer at Ipsos Loyalty and co-author of the Wallet Allocation Rule will make you rethink the Net Promoter Score
A few weeks ago, my good friend David Perry, bestselling author of the Guerrilla Marketing for Job Hunters series and managing partner of Perry-Martel International, an executive search firm, called me and said you need to read The Wallet Allocation Rule - Winning the Battle for Share -- and interview Tim Keiningham, co-author of the book, Global Chief Strategy Officer and Executive Vice President at Ipsos Loyalty.
Welcome to a Leadership Channel podcast on TotalPicture, this is Peter Clayton. If you are in a leadership position in your organization - responsible for HR, recruiting, marketing or sales - I encourage you to listen to this podcast, because it will give you a fresh approach to customer loyalty, and what that really means to your business.
Companies currently spend billions of dollars each year measuring and managing metrics like customer satisfaction and Net Promoter Score (NPS) to improve customer loyalty. These metrics, however, have almost no correlation to share of wallet. As a result, the returns on investments designed to improve the customer experience are frequently near zero, even negative. Surprised? Me too.
The Wallet Allocation Rule is a revolutionary, definitive guide for winning the battle for share of customers' hearts, minds, and wallets. Backed by rock-solid science published in the Harvard Business Review and MIT Sloan Management Review, this landmark book introduces a new and rigorously tested approach--the Wallet Allocation Rule--that is proven to link to the most important measure of customer loyalty: share of wallet.
Peter Bregmen, Bestselling Author and CEO of Bregman Partners, Shares Leadership Strategies and Effective Communication Skills You Can Master in Four Seconds.
"It's not enough to excel at managing your time; you need to excel at using that time powerfully."
Peter Bregman began his career teaching leadership on wilderness and mountaineering expeditions before moving into the consulting field with the Hay Group and Accenture. For the last 17 years, he has been the CEO of Bregman Partners, a company which strengthens leadership in people and in organizations, through programs including the Bregman Leadership Intensive, Coaching, and as an advisor to CEOs and their leadership teams .
Welcome to a Leadership Channel Videocast and Podcast on TotalPicture, with your host, Peter Clayton.
What Happens When Your Company's Deep Smarts Walks Out the Door?
When highly skilled workers, subject matter experts, engineers, top sales talent, managers - leave their organizations, they take with them years of hard-earned, experience-based knowledge - much of it undocumented and irreplaceable. Organizations can thereby lose a good part of their competitive advantage. Everyone talks about "our people are our most important asset." Well, if that's true, why do so few companies make an effort to document and preserve the "brain trust" before it's gone?
Welcome to Leadership Channel Podcast on TotalPicture Radio this is Peter Clayton. My host today is CEO Advisor and frequent TotalPicture Radio contributor David Dalka, who leads a fascinating conversation on this timely and important topic. Joining David is Dorothy Leonard and Gavin Barton, coauthors (with Walter Swap), of Critical Knowledge Transfer, Tools for Managing Your Company's Deep Smarts, published by Harvard Business Review Press.
Welcome to TotalPicture Radio. Today's Leadership Channel podcast - and vodcast with Nicholas Carlson, author of Marrissa Mayer and the Fight to Save Yahoo! is brought to you by Recruitifi. With RecruitiFi, you can easily connect with top recruiters and passive candidates interested in exploring new opportunities. Use the link on Nich's show page - and Recruitifi will waive the $50 listing fee for your first Jobcast.
In Contributing Editor to Inc magazine, Geoffery James, recent article titled 7 Books You Should Preorder Today, you'll find on the list Marissa Mayer and the Fight to Save YAHOO! written by our guest, Nicholas Carlson on this Leadership Channel edition of TotalPicture Radio. Actually no need to preorder as the book has just been published by 12 (Hachette Book Group). In his day job, Carlson is Business Insiders Chief Correspondent.
Watch the Video Version of the Interview with Nich Carlson:
Hi this is Peter Clayton. There are not very many business books I would describe as page-turners -- but this one is. Through exhaustive research and countless interviews, Carlson brings us the inside story of how Yahoo got into such awful shape in the first place - the backstory of the meteoric rise of Yahoo in the 90's, and near-implosion during the doc-com crash of 2000.
Nich's coverage of Yahoo won Digiday's award for "Best Editorial Achievement" of the year.
Stay tuned! the interview with Nich Carlson will air this weekend!
An in-depth conversation with international business leader, keynote speaker and author, Roger Harrop.
According to our guest today, "These really are the most exciting of times for business! Nothing is a given any more. Technology is moving at an incredible speed and the winners are keeping it simple - because it is!"
"Business is simple. Somebody wants to buy. Somebody has something to sell. Maybe somebody has to make something. That's all business is... simple."
Welcome to a Leadership Channel podcast on TotalPicture Radio. This is Peter Clayton. Our special guest today is Roger Harrop, introduced to the show by David Dalka, who conducts our interview. David is a frequent contributor to TotalPicture Radio; he's a Business Transformation Consultant / Facilitator / Keynote Speaker. You'll find relevant links related to this podcast in the sidebar.
Although everyone will benefit from David's conversation with Roger, those of you who are involved in talent acquisition and HR will find his ideas especially relevant and useful. For instance, have you ever auditioned a job candidate, rather than just interviewing a candidate? I think you'll find this approach fascinating and worth exploring in your own organization. Roger's latest book is titled: Win! How to Succeed in the New Game of Business
Roger Harrop - TotalPicture Radio Transcript
Welcome to TotalPicture Radio. We produce cutting edge videos, webinars and podcast interviews with the focus on talent acquisition, recruiting, HR technology, leadership and innovation. Visit our conference and events page on totalpicture.com to learn about TotalPicture media's unique video and podcast offerings that many of them must attend conferences throughout the year.
According to our guest today, these really are the most exciting of times for business. Nothing is a given anymore. Technology is moving at an incredible speed and the winners are keeping it simple because it is. Business is simple. Somebody wants to buy, somebody has something to sell. Maybe somebody has to make something. That's all business is - Simple.
Welcome to our Leadership Channel podcast here on TotalPicture Radio. I'm Peter Clayton. Our special guest today is Roger Harrop who was introduced to the show by David Dalka who conducts this interview and is a frequent contributor to TPR. Although everyone will benefit from David's conversation with Roger; those of you who are involved in talent acquisition and HR will find his ideas especially relevant and useful. For instance, have you ever auditioned a job candidate rather than just interviewing a candidate? I think you'll find this approach fascinating and worth exploring in your own organization.
Roger has spent over 25 years leading international businesses including the PLC, which puts him in a unique position to deal with present day business challenges. Based in Oxford in the UK, he is an international business growth speaker who inspires and entertains audiences with his acclaimed Staying in the Helicopter programs which you'll hear about in David's interview today. Roger is also an author, business adviser, mentor, consultant and independent director. His latest book is titled Win! How to Succeed in the New Game of Business. You'll find a link to Roger's website on his show page in the Leadership Channel of TotalPicture Radio.
And now, here's David Dalka with his interview with Roger Harrop. Enjoy!
David: Thank you Peter for that great introduction. Roger, the book starts with a sentence, "Business is simple." Why did you decide to start the book with that sentence?
Roger: Well, that's a good question, David. I believe business is really simple but what I find is us, us human beings; us be people running business, spend all our time trying to make it too complex. At the end of the day, someone wants to buy something, someone has got to sell and maybe someone has to make something. That's all it is and the simpler we can make it, the easier it is to map out the root through to profitable growth.
David: So what prevents business leaders from getting back to those basics and seeing the big picture?
Roger: Well, everything conspires against this. We all get sucked in to the detail and I guess what I'm seeing these days is that more than ever before. All of us seem to expect to respond to emails immediately, to expect to respond to social network messages immediately. All of that is sucking us into the detail and getting this helicopter on the ground rather than up in the air where I'd like for it to be, looking over the horizon and mapping out the future of the business. Basically when you can get up there and look at the business from 30,000 feet as it were mountains become molehills. That's the way it works in my experience.
David: What role do large legacy leverage consulting firms play in creating the above problems?
Roger: Well, I'm amazed. Just the other day I was with a client and they had had a major consulting firm quoting them for some work and it still seems to be the case. The consultants, large consulting practices still have the mindset that the quality of what they're going to do depends upon the weight of the proposal they put forward. The document needs to be really big and very complex and using all kinds of words the client doesn't understand just to sort of justify the fee they're putting in. It's most unfortunate because it really doesn't need to be that complex.
David: So it's not just the proposal though then, is it? It's also the deliverable. So what's your ideal deliverable, Roger? What should people be asking their consultants for?
Roger: Results. I'm not trailing. I know all consultants are trained to trail their coat for more work and more work and more work but at the end of the day, surely for a consultant to be really giving a client what the client needs is giving them the tools, the simple tools to help them achieve whatever it is they're trying to achieve and be judged upon that achievement. Not forever coming in with more complexity, not forever suggesting they do more and more work.
Now, that might be counterintuitive to a lot of consultants but I really do believe that's how it should be. When I go into a business, I'm afraid I try very hard not to call myself a consultant. I call myself a business adviser and I say to them my job is to help you but to get out of your business as soon as possible so that you are moving forward and you're achieving the success you're looking for. I want to make myself redundant as fast as I can, and I really do think that's what all consultants ought to be doing.
David: I totally agree. So we live in this time of great change where people need to hire new skill sets, bring on new generations of people. Frequently, that creates challenges. What are the challenges in hiring people and why is that such a problem area for companies globally?
Roger: I have to say that business leaders at all levels, as a big generalization, I don't think they're prepared to put enough time and effort into that. They either subcontract it to HR or to somebody else to do; whereas if you really want to get a round peg in a round hole, if you really want to have talent and all the research is showing there is going to be a shortage of talent between now and 2030 worldwide - if you really want talent, you've got to invest the time and the effort into getting the right talent into your business.
It's been shown that if you recruit the wrong person and they're gone within six months either you get rid of them or they choose to leave, the cost to the business is a minimum of 5 times their annual salary. That is a significant amount of money.
The other piece of research that's been done is that if you use traditional methods of recruiting, two interviews and you recruit and then you'll... sorry, you interview and then your boss interviews, you'll only get it right two times out of five. Now that's a 66% failure rate and I would challenge every business leader where else in your organization would you accept that level of failure? It's not good enough.
David: Well, some do it in customer service but that's a different topic. ☺
Asian geography population trends also play a large role in the future of business and hiring with global workflow shifts going across borders now. What opportunities do you see to improve the way that companies that are global handle this?
Roger: There's a basic thing I would say which is no matter who you're recruiting, no matter what level you're recruiting at, you need to audition as well as interview. Ask yourself the question, if you were setting up a restaurant or you had a restaurant anywhere in the world and you wanted to recruit a chef, how would you find out if they're any good at what they do? What you do is to get them cook. So why not do the same when you're recruiting a salesperson? Why not do the same when you're recruiting a finance person? And most particularly when you're talking cross cultures, you really want to see them in action.
The other great thing about auditioning, you know, I'm a great believer in one day assessment centers but smaller businesses, they don't have the time or maybe even the finance to do that but even so, they can still set up a scenario where you get each of the short list of candidates to present to you how they would deal with that situation. The great thing is if you are presented to rather than interviewing, all the stress comes off you. Whether you like it or not when you're interviewing you're in charge and you are, to some extent, stressed and you're not listening as well as you might otherwise. Turn that on its head and audition, you could have two or three people in the room - not just you - where this person is presenting to you and you're listening. You're looking at body language. You're looking at all kinds of things that you don't otherwise look at in terms of making an assessment of that person not just how he or she is going to be able to do the job, but how he or she might fit into your culture, because that also is a very important ingredient.
David: Tell me a little bit more about how somebody... that's a concept that doesn't happen too much here in the United States. Tell me a little bit more about how somebody would set up one of those auditions and make that a palatable idea to somebody who's never thought of it before.
Roger: Let me give you an example actually in the US. I was recruiting a president at my US operation when I was in the corporate world, and we chose to do a one-day assessment center. This was not far from you, David, near Chicago; and we had the final six candidates and throughout the day we had a series of things. We had some scenarios we put forward that were individual but we also had group where all six candidates, all the final shortlist candidates were together. I'll just give you one example that sort of proves the point.
As I recall it, we had the six around a table. There were four of us assessors sitting in the corner just quietly watching and in this particular case I think they were given a list of maybe 20 or 30 of the stages of a project plan, if you like, but they were all in the wrong order. Very simply the request to them was firstly, for 10 minutes on their own please put those in the order they think are right for a project and then when that was finished, they then had 20 minutes jointly to discuss and agree the order that they all agreed around the table. And that was it. Nothing else. We just sat and watched, and it's fascinating by the way; it always is fascinating. But there was one guy there who said nothing. Absolutely nothing. And we're thinking, this is a bit strange. How does he think he's going to get the job by saying nothing?
We then did another group exercise later in the morning and the same thing, he didn't say anything. So at the lunch break, we had him in and we said 'look, Chuck, you've said nothing all morning. What's going on?' And he said, yeah, he said. 'I don't like people and when I'm working I never come out of my office and I never talk to anyone.' And you know there is no other way we would have found that out, in my opinion. No other way at all. This guy's CV was magnificent and before the event, he's the guy I would have selected. No question. I would have selected him. If I had done an interview, I still would have selected him probably, but this we would never picked up any other way. So there's so much to be gained, I think, from investing that time in recruiting and being able to particularly to look at people.
Back to your question, let's talk about a smaller organization let's say where they really can't invest in a whole day assessment center; what I would do there is write a scenario. So I was looking for a client of mine looking for a vice president of finance for a small business. What we did in that case is the final two or three candidates I sent them a set of accounts a week before the event, just a short set of accounts, and I said okay when you come next Monday you will have 15 minutes to present to three people in the room - which is going to be me, the owner of the business and his sales director I think it was - and what I'd like you to do is based upon the set of accounts we've sent you, would you please tell us something about the health of the business, number one and number two please tell us your recommendations for the future. That was it. Nothing else.
It was really interesting, David, because the guy we recruited he joined us and some time later he said to me, he said, you know what he said, 'in my entire career I have never been asked to do that before. It is the most stressful thing I have ever had to do but it is absolutely right and I'm going to do that every single time I recruit in the future.'
So it doesn't matter what kind of business you are, what size you are, if you could invest some time in auditioning as well as interviewing it just seems to me it gets that success rate up from 2 out of 5 to maybe 4 out of 5 and that's worth an awful lot to you as a business.
David: In that earlier answer to the first question there you talked about culture. One of the things is that Peter and I see a lot when we're at events and different things is that companies have something in their culture that isn't right. It's either not customer focused enough, or it's not congenial enough, it's not cordial enough... there's something fundamentally flawed wrong. This whole thing of hiring with the group thing has a problem where if you need to correct that, it's really hard. How do you suggest to executive teams that they... what do they have to do to actually get over that?
Roger: Well, I guess really in a way you've sort of answered the question yourself, David, which is you've got to get that problem sorted out before you start recruiting otherwise you're going to recruit people who come in class people, talented people, and they're going to stay after 10 minutes and say 'I don't like this culture. I'm off. I'm going somewhere else.' So just sort of turn that on its head I think; the message that I am spending a lot of time these days passing on to chief executives, saying to chief executives is the world has changed. It started with the Millennial generation but it's much more universal than that now, which is people will not work for a company unless they share their values. Those values need to be clear.
When you are interviewing these days talented people they're as likely to interview you and they will say 'please, can you tell me what are the values of this organization because I don't get them off the website,' and you can't answer they won't work for you. In fact, they'd rather be unemployed than work for you. If you can't answer the next question will be, please tell us how you walk the talk of those values; and if you can't answer that they won't work for you.
So if you like, the message has got to get through right to the top of organizations that they have really got to have some values, that they walk the talk of these days because it's a new world we're in. Again, there was some research that I saw I think it was PricewaterhouseCoopers did which is to say, that isn't just the Millennials anymore, that is much more universal. Talented people of any age, any background, any experience anywhere in the world these days increasingly they will not work for companies, they will not work for organizations whose values they don't share.
David: Culture can be then clearly be used as a differentiation piece. You state that differentiation is everything and one of the chapters in the book and talked about that in detail. Why are so many businesses trying to differentiate themselves and implement new technology sometimes when the core business is not yet in order as we've just discussed.
Roger: That's a really good question. I don't have an answer for you. I think the easiest answer for me to give would be to go back to the beginning which is they just are not getting up in that helicopter.
One of the first things I do with any organization I work with, firstly, I always work with the top team and the very first thing I ask is, what's the purpose of this business? What's the purpose of this organization? I don't mean mission or vision. I mean hiring this helicopter of mine than that. What's the business here for? What does success look like? And you would think that people would be able to answer that immediately but they just don't. That is a big question sometimes I find I might have to have four, five or even six meetings with the top team before we really nail that because what I try and do is to get that to a sentence and then get it to half a sentence. Because if you can really nail that purpose of the business, everything else flows from that. Every strategic decision you take in the business after that gets easier including recruiting, including culture everything else flows from what's the business here for.
David: Did any stories stand out in that?
Roger: Yeah, sure.
David: That you can share maybe.
Roger: Absolutely. I'll give you one. I'll give you two actually. A major corporation in Dubai that I worked with for a number of years and they were half owned by the Dubai government and half owned by the Abu Dhabi government.
So what I do as I say when I go in and work with the top teams, I'll just stand at the flip chart, I'll give them a little presentation around purpose just to get them stimulated and I said, okay, so what's the purpose of this business? I just write up on the flip chart whatever I'm told.
So in this particular case, one of the VP's or the director said, I guess it's return on equity. So I said, okay, how much? I don't know probably... I don't know 40%? And somebody else said, no, I wouldn't have thought so. It would probably 30%. And then somebody else said no, no, no, that's absolutely wrong. Our purpose is to employ Emirates. That's what we're here for.
And then the chief exec stopped me and he said, 'Roger, you're absolutely right. We don't know. We don't know why the shareholders own us. I will find out.' And I went there once a quarter for something like 18 months, David, and it got to the point by the end as I walked in the door the chief executive would say to me, 'Roger, I still don't know and that's why we're in a mess, isn't it?' And I say, yup, that's right.
The only people who can tell you what the purpose of the business is are the shareholders. Nobody else. The owners. What does success look like? And when you think about it if you're running a business for somebody else, how on earth are you going to get there unless you know where it is you're trying to get to? It's all sort of pretty basic stuff but so many of us don't do it.
Another one for you and in a way when I have this sort of conversation in somewhere like Hong Kong or Singapore, it's a very short conversation because they say, well, we're here to make money and that's it. But in the West, I find it in particular that gets muddied. I worked with a firm of architects a little while back in London. Slightly unusual, only a small business. There were six shareholders, four were on the board and two weren't, and one was the lady who did the internal administration.
So same story, I said what's the purpose of the business and I stood at the flip chart and I got all kinds of stuff, David. I got save the planet, be the best architects in the world. It went on and on and on. I'm on to the third page and I'm thinking, where are we going to go with this? And then finally this little voice and it was a little voice, this lady who did the inside admin, she said, 'I'm a shareholder in this business and I'd quite like a return that's better than putting my money in the bank.' And there was total silence and believe it or believe it not, the CEO said, 'wow, we never thought of that before.'
It's in the front of my mind, because he rang me up the other day and he said, 'Roger, I just wanted to let you know that was a turning point for the practice.' Too damn right it was a turning point for the practice! Suddenly, they knew what it was they were there to achieve which was to make money, and everything else sort of flows from that. The way it works is the more money you make, the more you can invest in the business, the more you can grow and the more you can be successful,. That's sort of the way it works but it often gets muddied.
Just yesterday, I worked with 50 not for profit organizations, charities and it can get even more muddied there even though they're charities and they have a clear purpose which relates to their beneficiaries, the way almost all of them have to grow is to generate bottom line profit that they re-invest in their case 100% they re-invest. It's not for profit distribution. That's what they are. But it's the same point; the owners, the people running the business have got to nail that really before anything else.
David: Even if they go through that exercise right and they have good stated values at one point in time, you and I both know that frequently those actual actions a decade or two later don't match that plaque on the wall, don't match that page on the website. Why does that happen? I mean, we went through all that work, we got that, we communicated it to everybody. What happened?
Roger: You know what, they don't talk t each other. Firstly, I find particularly family businesses; yeah they may go through that exercise but then they never talk to each other again. They never say, you know what is this business here for? The business goes through the generations maybe. Even when you've got two or three partners who set up a business... I don't know, 10 years ago, maybe when they set it up they're crystal clear about the purpose but as time goes on, they diverge and they never talk about it. And for me, you know, there is a big role, there's a massive role here for independent directors.
The independent directors part of their job needs to be up in this helicopter of mine and asking those fundamental questions and making sure that the directors, the owners actually answer that question and say yeah, okay, that's what we said the purpose was three or four years ago; it's now changed but we agree it's now this and that's the way we're going. Life gets so much easier if you could do that. But as I say, I think independent directors, non-executive directors are really important for businesses at all levels.
David: I really love your chapter on customer prospect. As a matter of fact, I was at an event last night. I was at a holiday party and this lawyer who's a partner in a medium-size law firm and I said, what's your biggest problem in 2015? He says, we have no idea how to market and sell ourselves. We're always competing on price.. blah, blah, blah. We don't have enough leads or we found out about deals after they happen. How do you personally do your prospecting in your business and how do you in consulting and speaking and advising as you prefer to say it, how do you go about that? How should professional services firms look at this issue? How should any B2B business service to be thinking about this because it's a challenging area.
Roger: Yes it is, indeed. Interesting you picked on lawyers. I have to say the so-called professions, lawyers in particular, are the worse in terms of prospecting. The rule of thumb should be whoever is responsible for selling in your organization and maybe in your case David and mine, it's us. Whoever is responsible for selling, you should be spending a minimum of 20% of your time prospecting. My definition of prospecting is talking to people who have never bought from you or let's say not bought from you in the last three years.
Now, 20% of your time is a day a week. Have a look at your salespeople; do any of them actually spend a day a week metaphorically knocking on doors? Because if they're not, your business is probably going to be in trouble.
I used to have a rule in all the businesses, all the business sales I ran of every size which related to the percentage of sales in any one year that came from clients who had never bought from us before. We had metrics for that. I can remember one particular business we set that as 25%. That was a key performance indicator that was on page one of the monthly reporting pack what percentage of sales this year is coming from clients who didn't exist 12 months ago, two years ago.
I think that's an attitude of mine, frankly, we all need to have because if you want to grow as well and particularly these days where there is not the loyalty they're used to be, there is not the longevity there used to be, you've got to assume some of your customers and some of your biggest customers are going to disappears for whatever reason. They're going to move to China. They're going to go bust... whatever. So not only do you need to replace them but if you're going to grow you need more. Of course something that's always worth bearing in mind in this simple world of business of mine is there is a golden rule.
The more properly pre-qualified leads you have, the more business you get. Because it's a ratio. It's a ratio a lot of us measure. What percentage of leads turn into business? If that percentage is basically fixed for your business, if you double the number of leads, you will double the size of your business. That is the way it works. So a fundamental for absolutely everyone. Whether you're a lawyer, whether you're whatever it is that you're doing, if you can really get that pipeline of yours full, if you can double the number of properly pre-qualified leads, you will double your revenues. It is that simple.
Back to your question, how do I do it? As you know, I'm a professional speaker and I'm a consultant and I'm a non-exec director, and I'm a business adviser, as a professional speaker very simply I believe that people are much more likely to buy a professional speaker if they've seen him speak. So I do showcases, and a showcase for me is where I am speaking for no fee maybe just expenses, maybe an honorarium but I'm speaking to people who are people who might then book me at my fee. So that's me showcasing. I work very hard at doing that. I have now spoken in 40 countries around the world and the way I've developed each country is by doing just what I've described, by showcasing and then working hard at that, doing all the homework first, doing all the work afterwards.
My website is something that I put a lot of effort into so that I put a lot of thought into the kinds of people who are looking to book me as a speaker. To be honest, it goes from one extreme which would be a highly professional event planner, event architect who's got a few nanoseconds to make a decision and therefore the moment they get onto my site, straight in front of them are video clips of me speaking. No nonsense beforehand, no music, no introduction, no nothing. Just clips of me speaking so they could decide whether they want to go further and look at me.
The other end of the scale is I don't know, a medium-sized business where it's probably the PA to the managing director owner where he said to her (it's usually that way around) let's have a conference. I want to have a top speaker who's talking about business growth. You organize it. And she probably knows nothing about organizing event, nothing about booking a speaker. So what I've put into my website is a massive knowledge zone and it's not just about speakers; it's about how to set up an event. There's videos, there's PDFs, there's white papers. There's all kinds of free information there which will help her put that event together but also how... that I've put videos in there. How do you select a speaker? How do you go about doing that? And all the other stuff.
So that's what I've done and then I track and the proof of the pudding is that the second most viewed part of my site is that knowledge zone. That's where an awful lot of people go. I do that. I use Google Ad Words but more importantly perhaps I use YouTube Ad Words. There's YouTube clips of me speaking and that works really well for me. I used LinkedIn pay-per-click which only started 12 months ago. A LinkedIn pay-per-click works well for me because it's targeted at the people I'm talking about. I write articles. I Twitter. I put comments on LinkedIn. I use social networking an awful lot. Those are generally the sort of things that I do and as you know, I've recently written my second book and of course I'm doing an awful lot around that and that in itself helps in terms of my prospecting.
A long answer to you but that's the way I do it for me.
David: You also talked about later in the book many people have used on pricing these days that are all about cost cutting. That's my opinion. That's not what you said. You have the opposite viewpoint. Please explain your viewpoint and why you believe it's so critical of businesses who have to price themselves fully.
Roger: Okay. So it sort of goes like this, my observation is everywhere I go is the particularly post 2008, pretty well no one is mediocre anymore. If your product, if your service is mediocre, you're dead. You've disappeared or you're in the process of disappearing. What that means is you're probably pretty good at what you do; in fact, you're probably outstandingly good at what you do and if you are, you deserve higher prices. I always have to say this two to three times when I say it because it's got to get through the grey matter and it's got to counter all that nonsense that you're talking about, David, of discounting and all that stuff we've had over the last few years.
If you're in the commodity business, fine. If you're in the commodity business, you have to sell on price and if you're selling on price then you have to set up your entire business to have the lowest cost of every operation you do. But the vast majority of us aren't in that world; we're in the business of selling perceived added value and we require people to pay for that perceived added value and that's all around not discounting. The moment you discount, if you think about it, the psychology is you are saying to people we are not worth the value we thought we were. Is that really the message you want to get across?
I've had my salespeople come to me in the past and say, you know, boss we should have the lowest prices, and I always responded to them in the same way and I said, well, I don't understand that because if we had the lowest prices we wouldn't need you. You wouldn't, would you? It is nonsense. I used to write into my sales guys contract, their employment contracts very first item and they hated it by the way - the very first item was your job is to ensure in the list of reasons why customers buy our product prices below number three. That's their job. Never ever give salespeople price discretion. They'll give it away. It's too easy. Their job is to sell at a higher price. Sell that perceived added value.
Look at Apple. I bought a MacBook Air 18 months ago; it costs me what, four or five times what I could have bought a PC for? It's ridiculous. It's illogical. But all of us buy illogically. I'm as happy as Larry with it -- I love the thing but that's a ridiculous price but I'm paying for that perceived added value of everything. In marketing terms its called products around that Apple represents.
Same with a BMW. In Germany last year, a German test house did a definitive piece of work. They compared a BMW 1 series with a Ford Focus on 87 different points. Absolutely everything. On all 87 the Ford Focus won but the BMW was 32% - 32% more expensive and it's selling like it's going out of fashion. We do not buy logically. We buy irrationally. Our job and the job of our salespeople is to tap into that.
Even having said all of those things, the real acid test I always ask people is just ask yourself the question, if you put up your prices 1% - just 1% - 9 o'clock tomorrow morning, would you lose any customers? And you know what, at least 99 out of 100 is probably 999 out of 1000 the answer is no, in which case why don't you do it. Because there's something about price that does not apply to anything else. It goes straight on the bottom line to re-invest in the growth of your business. Just do it.
Running business is about taking risks. That's the way it works. I think the risk of sticking 1% or 2% on your prices is actually pretty low and it is the right and the responsible thing to do.
Back to this awful word discount... by the way, I say to people, you know the reason why an Apple Mac is more expensive than any other PC is because if you type in the word discount it blows up. Your PC should be the same.
But back to this discounting thing, if you are really, really under pressure to do something, don't drop your trousers. Don't discount. Give stuff. Give stuff that has a high perceived value to your client but will cost you very little or nothing.
I worked with a group of 40 recruitment consultants recently and I would have thought they had much opportunity to do that but again, we just spent 20 minutes on a flip chart, and we ended up with three pages of things; things that they could give rather than discount, things they could give that would cost them very little or nothing but preserved that price of theirs and that perceived value that they've worked so hard to achieve.
David: So before I urge people to buy the book, Roger, is there anything that we didn't talk about that's on the top of your mind that you're just dying to get out there?
Roger: Well, we touched a bit on it but there is a whole chapter in the book which is all around moving further on from this values things of employees, you know, it's got to be a great place to work. A very interesting piece of work that was done by Harvard, they asked employees what are the eight things that you want from your employer in order of priority. I quote all these in the book; and in fact, in the book, there's an app that goes with the book where you can actually complete this and mark yourself and do a business health check, but these eight things, the important thing to say, the first important thing to say is money is not amongst them. In those top eight, money is not included. So that's the first big message. It is not all about throwing money at people but one of them - let me just tell you one of them - is discipline. It's the second in the order of priority. What they're saying is we want to see our co-workers disciplined. If our co-workers step out of line, we want to see them disciplined. We don't want soft management. It's unfair.
When I go around companies, again, all over the world I get them to complete a questionnaire on this, that is often the one where they mark themselves very low. Yeah, we're a bit soft, we really aren't as good as we ought to be in making sure that we have 10 out of 10 people everywhere and we don't have any passengers. It's simply not good enough, and that's the employees telling us that's not good enough.
So I think that's some really interesting thing all around it's got to be a great place to work.
David: The book is called Win! How to Succeed in the New Game of Business. Roger, on behalf of Peter Clayton and myself, thank you so much for joining us here on TotalPicture Radio.
Roger: I loved it. Thank you very much indeed, David and Peter. Best of luck to you. Thank you.
You can connect with Roger on Twitter @TheCEOexpert. You'll find links to his website and YouTube channel on his show page in the Leadership Channel of TotalPicture Radio, that's totalpicture.com. This is Peter Clayton. Thanks for tuning in.
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