LMAA Advantage Clutch Presentation October 2009 (F)

www.clutch.com.au ©2009 Clutch Pty Ltd 2 ColourGrid® Applications & Systems ©2003-2009 XAX Pty Ltd

ColourGrid® ©2003 Intellectual Property Holdings Pty Ltd Author: Dr. Colin Benjamin . All rights reserved in all media

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WHAT CLUTCH DOES

Typically we measure two things: 1.  How consumer markets think and in which geographic areas that thinking is strongest to:

•  Identify Distribution & Ranging Opportunities •  Target Trade Promotions •  Tailor Brand Marketing Campaigns •  Drive ROI from Sales & Marketing efforts

2.  How employees think about current and potential business performance to:

•  Identify areas of the business that require action •  Prioritize those actions for the greatest overall impact on

results.

Need new picture – this one works but its an FL image, Alex read the info on the left and show me



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INTRODUCTION TO WHAT WE MEASURED

Our survey, in addition to the Advantage Group components focused on two key areas:

1.  How the customer thinks 2.  How satisfied the customer is with how their business is performing

WHY? To provide better understanding of the customer & the commercial implications of their expectations, motivations and beliefs.



AN ANALOGY FOR THE TRADITIONAL CHALLENGE



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HOW YOU USE IT

How they Think By understanding the expectations of the customer, their thinking, we are able to better target Trade promotions and communications

What they think about their business By understanding the customers perception of their own business performance we can ensure that we are adding value and making it easier for that customer to deal with us



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WORKING THROUGH IT

How they Think 1.  The key 3 customer markets 2.  The markets explained 3.  Channel results & a working example

What they think about their business 1.  The 4 dimensions of business performance 2.  The dimensions explored 3.  Channel results & a working example

Next and Future Steps



HOW THE CUSTOMER THINKS

In our survey we included questions that enabled us to profile the expectations and motivations of the customer, their Mindset.

We tend to only look in the rear view mirror, at past sales, to segment customers.

But by understanding their thinking we can anticipate the motivations of the customer, which allows us to better tailor our sales & marketing efforts, and improve our ROI.

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NEED QUOTE ON UNDERSTANDING THE CUSTOMERS THINKING



HOW THE CUSTOMER THINKS – THE METHODOLOGY

•  We measured each respondent on the preference for all 16 possible mindsets.

•  Then we looked to identify the key patterns of thinking

•  We have previously identified 37 possible patterns of thinking.



HOW THE CUSTOMER THINKS – THE METHODOLOGY

1

2

3

•  In the outlet survey we identified three distinct patterns of thinking.

• These three patterns are the basis of our segmentation of outlet respondents.



THREE DIFFERENT TYPES OF THINKING

With the hours I work, and the thanks I don’t get, the last thing I need is people coming in here with expensive new stuff. I know what sells here & I know what wont sell in this place.

DEFENDERS

DEAL MAKERS

DISCOVERERS

We run a good profitable business here, because we carefully assess the risks & benefits with everything we do. I make sure my suppliers know what they need to deliver to improve our return on investment.

We are not like other businesses, people come here because they know that we always have something new & different. We pride ourselves on the quality of our products and service and are always on the lookout for new products that fit our offer.

n = 360



THREE DIFFERENT SETS OF COMMUNICATION NEEDS

With the hours I work, and the thanks I don’t get, the last thing I need is people coming in here with expensive new stuff. I know what sells here & I know what wont sell in this place.

DEFENDERS

DEAL MAKERS

DISCOVERERS

We run a good profitable business here, because we carefully assess the risks & benefits with everything we do. I make sure my suppliers know what they need to deliver to improve our return on investment.

We are not like other businesses, people come here because they know that we always have something new & different. We pride ourselves on the quality of our products and service and are always on the lookout for new products that fit our offer.

n = 360



DEFENDERS - HOW THEY THINK

The thinking of this market is characterised through statements like these: •  There is no such thing as a free lunch •  I don’t get opportunities to have fun, mate •  I am doing everything I can to support my family •  Its tough going and no one’s going to do you any

favors in this world •  Its ok for you guys, but my boss won’t let me do that •  Nah, that wont sell here, forget it •  We’ve tried that before, it didn’t sell last time and it

wont sell this time.

Picture of a guy looking for a fair deal, he looks tired, economically challenged and has a negative look on his face – he must be in a

bar or liquor store



DEFENDERS - HOW THEY MAKE DECISIONS.

What are they looking for: •  Reliable, dependable service •  Tried, Trusted, well known “everyday” Brands •  Low Prices – are permission to play •  Simple promotions, with low effort, that sell

themselves •  The odd freebie as a reward (Merch/product) – or

maybe even something special for his/her kids •  Something for their loyal “Punters” – Prizes/Gifts •  Most definitely volume based deals, Buy 2 get….. •  Gifts at the point of purchase – no redemption •  Prizes for the everyday man

Same image as previous slide



DEFENDERS – DOING BUSINESS:

•  Very loyal when they feel they’re being looked after •  Often come across as Negative, doubters, with little

trust for suppliers •  Regularly pointing out that their buy price is not fair

compared with what is being offered to others •  Very wary of new products •  Very careful about doing something differently •  Short term focus, it’s the next promotion, not the plan

that matters •  Will buy impulsively if they think the deal is off the

table when you walk out

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n = 360



DEFENDERS - BUSINESS IMPLICATIONS

•  These customers are focused on the basics, and will be single minded on suppliers delivering a fair deal on everyday brands…. Get that wrong and all else will be meaningless

•  New products are a tough sell, you may be more effective gaining trial by bundling offers with a tried and trusted brand

•  Deals and margins are calculated in dollars, not percentages!!!

•  Volume based rewards or deals are a winner •  If there are merch and gift based promotions on

everyday brands, make sure you call on them first.

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n = 360



DEAL MAKERS - HOW THEY THINK

The thinking of this market is characterised through statements like these: •  Let me have a think about it and I’ll come back •  Its only a good deal when it’s a better deal than you

did last time •  I don’t make less than that margin on anything. You

have to get up earlier than that mate…. •  Right, so you think, you know better •  I told you last time you were here, that’s not how I

operate •  It’s got to be competitive and you know what I mean

by that – I’m not here to make friends •  I can’t afford to waste my time on stuff like that

Picture of the conservative family business man. Neatly presented with a look of experience, confidence and control



DEAL MAKERS - HOW THEY MAKE DECISIONS

What are they looking for: •  Recognized brands at acceptable margins •  Credential – who else is buying this? •  Safe bets, that improve their competitiveness and

their return on investment •  Convenience and Service, make it easy and efficient

to do business •  A better deal than the guy down the road or than your

competitor offered – comparative value •  Reliability and Respect •  No surprises •  Evidence that a new products will work & that the

greater the risk, the more responsibility is shared

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DEAL MAKERS – DOING BUSINESS:

What are they like to deal with: •  Very competitive and at times uncompromisingly

demanding •  Very fact based, facts are critical •  Conservative and considered, they may take a while

to come around to a new way of doing things or accepting a new range

•  They are influenced by the market and are a fast and first follower of proven success

•  Reluctant to give things a go without a guarantee •  Acutely aware of pricing, margins and importantly

what their competitors are doing n = 360



DEAL MAKERS - BUSINESS IMPLICATIONS

•  Singularly focused on building a better business by getting a better deal

•  Leverage is the weapon of choice they know what they have that you want and they will be determined to make you earn it

•  Not usually a first choice for new product launches unless it is with a recognized brand, that is heavily invested in – in this case not calling them first would be a big mistake

•  Whilst they know the boundaries and stay well within theirs, they will be determined to stretch supplier boundaries.

•  They will demand & critically judge supplier effort and commitment as a mark of the relationship

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n = 360



DISCOVERERS - HOW THEY THINK

The thinking of this market is characterised through statements like these: •  Life is what you make of it •  I think if we have a big opportunity to sell more… •  We had this Pinot from Chile and it just flew out •  I am always up for trying something new, as long as

its premium quality •  That offer is too “bogun” •  Everyone loved that tasting we did •  I have had a look into those, what do you think? •  I’m managing this place while I’m studying OR •  I based the feel of the place on a really cool place I

went to in Budapest

Picture of younger, mid 20 to mid 30 something, fashionably dressed and styled

with a look of intrigue and exploration



DISCOVERERS - HOW THEY MAKE DECISIONS

What are they looking for: •  Premium quality products, away from the mundane

and everyday •  Knowledge - to make well informed choices •  Points of difference in products & product quality •  Promotions and experiences that they can get

involved with •  Opportunities to express their “global” awareness –

environmentally and culturally •  Unique products that aren’t offered or carried in other

outlets •  An appreciation and recognition for how they and their

outlet are “different” than the rest

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DISCOVERERS – DOING BUSINESS:

What are they like to deal with: •  Very big on the relationship front, they are always

expanding their base of contacts & friends •  Will be enthusiastic and very open to trying new &

different offers •  See margin as a given, not a bargaining chip •  Will expect that they are treated differently than other

customers & often demand evidence of that recognition

•  Very big on the experience, and therefore quality is an imperative

•  They will ask a lot of questions •  They will be careful as to how they promote n = 360



DISCOVERERS - BUSINESS IMPLICATIONS

• These customers are focused on the relationship and will judge the behaviour and loyalty of a supplier representative on the sharing of information and level of recognition given to them • They are always scanning the marketplace – whilst they are not price sensitive per se, they will know a good and a bad deal when they see one •  Margin management is a shared responsibility •  Preferential and selected distribution is an expectation •  Involving them in experienced based events is a core relationship builder •  Involve them & their opinion in selected new product launches tailoring activity specifically for the outlet • Keeping them informed about the market, market trends and new products is a fundamental.

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n = 360



THE MINDSETS VARIATIONS BY CHANNEL

Variations in Mindset across the industry and across channels justify a fresh look at who we are dealing with in the trade.

Clear variations exist that greatly influence the suppliers ability to: •  Build better relationships •  Gain ranging if new lines more effectively •  Engage the customer in promotional activity •  Drive volume growth through customer accounts

Vertical blinds of all three market pictures



MINDSETS BY CHANNEL



THE IMPLICATIONS OF DEALING WITH DIFFERENT MINDSETS

The implications for trade going forward are: •  The ability of the supplier to adapt new offers to the

varying customer expectations •  The need to segment the customer by the areas that

influence tomorrows sale rather than yesterdays •  More effectively engage the customer by being more

effective at appealing to what matters to them •  Generate more ROI by anticipating the adoption rate

of new products or promotions by customer type or channel




OUR WORKING EXAMPLE – RESTAURANT CHANNEL

•  In the Restaurant channel the thinking is clearly led by Discoverers •  Communications to this channel should favour this thinking and allow for Deal Makers

•  For example: if you were launching a unique new product to this market you would target Discoverers to accelerate trial and on the basis of this trial and referral be selling secondly to the Deal Makers , who will generally require some track record •  Alternately, if you were promoting a strong existing brand, most effort should be directed at Deal Makers. Discoverers, will be enticed, if they can “do it differently”.



FROM HOW I THINK - TO HOW I THINK ABOUT MY BUSINESS

Vertical blinds of all three market pictures Picture of a happy business leader with a

middle manager in the background with his head in his hands



HOW DO THEY THINK THEY ARE PERFORMING

Our measurement of business performance pre-supposes the fact that perception is reality. We simply measure the perception of performance across a number of variables by asking: •  How is the business tracking on this dimension AND •  What is the business capable of doing

The Gap between these scores highlights the areas of focus and in need of focus in a business.

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Need an image here that depicts the face of the organization and the reality of the organization as being distinctly different



A NOTE ON THE METHODOLOGY

Performance Gaps are relative to account for “emotional” variations and scores are compared against each other by reversing out bias:

GAP scores can predict the severity of an issue within an organisation Comparative scores, which we have used here, compare across organisations.

Resp. Skills Current

Skills Potential

GAP Avg. Gap

Comparative Score

A 7 9 -2.0 -1.8 -11.1% B 5 8 -3.0 -2.7 -11.1%

STAKEHOLDERS STAFF

SYSTEMS SUGGESTIONS

LEADERSHIP

SOLUTIONS

SKILLS STRUCTURES SHARED VALUES

MANAGEMENT

BALANCE

SHARED VISION

TODAY

TOMORROW

INTERNAL EXTERNAL

STRATEGY



Picture of a happy business leader with a middle manager in the background with his

head in his hands

LOOKING AT BUSINESS PERFORMANCE

As suppliers, by understanding these areas we can play to a customers strength and effectively become easier to do business with. •  We are measuring 4 areas of performance:

Management, Problem Solving & Systems

Leadership, Opportunities

& Strategy

Staffing, Skills and Priorities

Customers, Stakeholders

& Tactics External Internal

Tomorrow Today



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OVERALL SATISFACTION

An overall satisfaction score is calculated by assessing the size of the gaps across all areas of the business. These totals are then compared to the industry average to remain relative.

At this High level view we can see that Off Premise Customers are far happier with their businesses than On-Premise Customers.

Conversely, those customers in both On and Off Premise markets, appear to be dissatisfied with their overall business performance. n = 334



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This general satisfaction is quite variable across channels and certainly banner groups.

Even at the this high level it is clear that business performance issues impact certain channels more greatly than others.

This variance would directly relate to how easy these customers are to do business with

n = 334



An image that represents the supply chain, ordering systems, delivery and customer

service _ not cheesy though

MANAGEMENT, PROBLEM SOLVING & SYSTEMS - TODAY

On this dimension we are measuring the satisfaction levels with: •  managing and resourcing current processes and business practices •  effectively performing the everyday job of satisfying the needs of staff and customers.

Low levels of satisfaction here are also visible through: •  Poor customer service •  Inefficient management of inventory / activity




As you can see the levels of satisfaction on this dimension vary greatly by channel:

With low levels of satisfaction you can expect: •  Discontented customers and staff •  Poor execution capability in the area of stock management and promotional support.

The Implication for the supplier is a greater requirement of effort around ranging, supply, payment and promotional execution.

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n = 334




Consistently for those dissatisfied customers Problem Solving came up as the largest performance issue, sighting an inability for these businesses to make decisions about both problems and opportunities.

Furthermore many of these business found the planning, direction and controls within their businesses to be lacking.

http://www.dreamstime.com/stock-image-clock-mechanism-image4203641




The implication for Suppliers here is that the greater the satisfaction of the customer on this dimension, the greater their ability will be to : •  Make commitments to new propositions •  Adapt to New ways of doing things •  Quickly activate new activity •  Manage Supply and customer needs •  Represent brands and messages favorably

Low levels of satisfaction here have significant implications for return on effort.

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n = 334



LEADERSHIP, OPPORTUNITIES & STRATEGY - TOMORROW

On this dimension we are measuring the satisfaction levels with: •  Business Development Capability •  Consistency of offer

Low levels of satisfaction here are also visible through: •  Ineffective marketing •  Poor price and margin management •  Chopping and changing sources of supply

Four Quadrant Model

An image that depicts the vision in action – the art of the breakthrough and the

breakaway moment from competitors




As you can see the levels of satisfaction on this dimension again vary greatly :

With low levels of satisfaction you can expect: •  Under-resourced sales & marketing effort •  Low to moderate levels of revenue growth •  Inconsistent decision making on product.

The Implication for the supplier is a greater level of reliance on the supplier to grow the business for them.

CHART

n = 334




In the Functions and Venue channel a key driver of dissatisfaction was strategy, clearly defining a direction for the business.

On the other hand the “Other Retail” channel was driven by a lack of process to encourage innovation and business development.

Accommodation had an unhealthy balance of those two driving their result.

Same image as before




The implication for Suppliers here is that the greater the satisfaction of the customer on this dimension, the greater their ability will be to : •  Drive revenue growth opportunities •  Be open to and adopt new ideas from suppliers •  Deliver a consistent offer •  Protect their identity over supplier brands

Low levels of satisfaction here have significant implications for sales & margin growth.

CHART

n = 334



STAFFING, SKILLS & PRIORITIES - INTERNAL

On this dimension we are measuring the satisfaction levels with: •  Capability and Capacity •  Getting the right things right

Low levels of satisfaction here are also visible through: •  Poor product knowledge •  Poor venue / outlet presentation •  A lack of focus on brands being sold.

Four Quadrant Model

Image of busy people running around but clearly working as a team – again not

cheesy




Consistently most customers surveyed were, to varying degrees, unhappy with this dimension of their business:

With low levels of satisfaction you can expect: •  Inconsistency in customer service •  Issues with staff training & compliance to range and promotional activity.

The Implication for the supplier is a greater need to measure compliance and invest in training staff with relevant product knowledge.

CHART

n = 334




Wine Specialists are a stand out on this dimension with large levels of dissatisfaction. In their case this is being primarily driven by a lack of necessary skills in their businesses. In their own judgment this is below the expectations of customers. This too is an issue for Image Bars and Functions/Venues channels.

All other channels measuring as dissatisfied on this dimension shared the view that staffing levels, retention and skill levels were equally to blame for business performance.

Same image




The implication for Suppliers is the ability to prioritize those customers that will generate adequate returns to justify increased investments in the area of product training.

Further customer issues with regard to staff levels and staff retention should be key considerations before such investments.

The clear risk is an over-investment against the sales opportunity.

CHART

n = 334



CUSTOMERS, STAKEHOLDERS & TACTICS - EXTERNAL

The measure here is the satisfaction levels with: •  Guidelines, direction and processes for customer service and resolving customer issues •  The businesses capability in delivering profit returns for its owners and suppliers •  Capacity to adapt quickly to change

Low levels of satisfaction here are also visible through: •  A lack of enthusiasm for the customer •  Inability to collaborate well with suppliers

Four Quadrant Model

An image that portays the front libne of the organization – and in this context probably a happy liquor retailer handing over a box to a

customer




Consistently most customers surveyed were satisfied with their capability in this dimension.

Customer and Partner management for most seems to be a level they believe their businesses to perform well in.

With low levels of satisfaction you can expect: •  Very transactional purchasing conversations and relationships •  Poor levels of staff empowerment

CHART

n = 334




Casinos clearly have an issue with this area of their business , most sighting a lack of direction and processes for resolving customer issues.

Functions/Venues and Image Bars channels alternately had consistent issues around the area of forming and developing profitable partnerships.

Same image




The implication for Suppliers, in this instance is more the ability to isolate high levels of satisfaction.

In doing so, longer term growth plans can be agreed and managed collaboratively.

For these customers, the risk, is employing the hooks or lures of an offer, instead of more open and direct dialogue (WIIFU), or in other words keeping it simple.

CHART

n = 334



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ON-PREMISE

The primary issues for the On-Premise trade surveyed, centre around: •  Ineffective stakeholder / supplier management •  Inadequate Staffing & Retention •  The need for better prioritization of effort

The key areas of strength are seen as coming up with new ideas and having effective systems for serving customer needs.

n = 334



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OFF-PREMISE

The primary issues for the Off-Premise trade surveyed, centre around: •  Ineffective stakeholder / supplier management •  People, Skills and Knowledge •  Clear direction and execution of that direction

The key areas of strength are seen as having effective systems for serving customer needs and having a capability to deliver plans that deliver the goals of the business.

n = 334




•  Remembering the dominance of thinking in Restaurants (Discoverers), you could expect more focus on the Tomorrow and External dimensions of the business.

•  With that in Mind, and despite a tendency for their to be a focus in process from Deal Makers, this channel wide dissatisfaction, sets a new ground rule:

•  The difficulty for suppliers to get “air time” & return on effort. •  Delays in decision making on new opportunities / products •  The opportunity for the supplier to grow through turn-key solutions / activity



Vertical blind of all 4 images


The perception of performance across the four dimensions we have explored vary greatly by customer and channel.

Understanding these issues and equally the strengths of the customer are critical to generating greater returns from both sales and marketing efforts.

The reality of this perception, is the daily field sales reality. Better returns are there for those that adapt.




OVERALL SATISFACTION BY CHANNEL



WORKING WITH PERFORMANCE ISSUES

Management, Problem Solving & Systems •  Avoid effort around new propositions •  Lower expectations on ranging & compliance Leadership, Opportunities and Strategy •  Protect your brand identity & exposure •  Help solve the inconsistencies of the offer Staffing, Skills and Priorities •  Work selectively on increasing product knowledge •  Drive simple , low involvement executions Customers, Stakeholders and Tactics •  Be very selective about growth partnering •  Focus on the supply of everyday brands

4 images vertical blinds again



KEY INSIGHTS AND IMPLICATIONS

Understanding the way our customers think, their expectations and where they think their business can improve, provides critical pathways for anticipating the most effective strategies and tactics for customer growth.

This enables us to develop more effective: •  Channel strategies / plans •  Product launch executions •  Promotional targeting •  Customer communications

Image of rubber hitting the road




The ability to segment activity and focus will increase yield from the channel. Getting the balance right between those who are: •  Trying to differentiate (Discoverers)

•  Driving drive bottom line performance (Deal Makers)

AND Further, leveraging the channel “filter”, of Making it easy to execute, order and manage – accommodating “Management” deficiencies. Is the Formula for success – WHY?

The customer thinks so!



WHAT HAVE WE LEARNT & WHAT DO I DO NOW

•  At an outlet level, there are 3 main ways of customer thinking. •  By segmenting the market this way you can more effectively anticipate your customers expectations. •  By ensuring channel plans target these expectations you can more effectively deploy resources •  By aligning communications, promotions and product offers more closely with the customer expectation, you can significantly improve your “return on effort”





WHAT HAVE WE LEARNT & WHAT DO I DO NOW

•  Satisfaction with business performance varies by customer and by channel •  The performance issues of your customer can significantly impact your sales. •  By understanding these issues you can align your effort with your customers strengths and possibly ease the burden of their weaknesses •  Planning your engagement with the customers business issues in mind, will result in a more effective use of resources and again, more “return on effort”.



NEXT STEPS

The next level of reporting provides: •  Channel specific customer strategy & actions •  Clear and detailed instructions on tailoring offers to different customer Mindsets •  Effective negotiating tactics by customer Mindset •  The critical business elements that are driving performance for customers and channels •  Clear examples on how to build the business relationship by working with the strengths of your customers business.

Image of literally someone taking the first step from maybe a line of people



FUTURE STEPS

•  Going forward the application of these measurements against the Mirror Programme this year and the inclusion of Major Retailers to this survey component next year, will increase the insights and utilities from this part of the Feedback Programme •  Further, the possibility of providing Industry Feedback by Customer Segment is a valuable next step.




SHAMELESS PLUG – OTHER ENGAGEMENTS

SAYING & SELLING THE RIGHT THINGS IN THE RIGHT PLACES Consumer Demand Analysis & Forecasting

•  Identify Distribution & Ranging Opportunities •  Target Trade Promotions •  Tailor Brand Marketing Campaigns / Communications •  Drive ROI from Sales & Marketing efforts

REMOVING ROADBLOCKS Business Performance Surveys

•  Objectively identify areas of the business that require action

•  Prioritize those actions for the greatest overall impact on results.




SHAMELESS PLUG – EXTENDED VERSION

Identifying distribution and ranging opportunities

Analysis of existing sales & distribution

Isolated performance gaps by Customer Customer priority & clear

execution imperatives

Confidential Confidential



THANK YOU!!!

Scott McLaughlin Clutch

C/- Next Reality Group Level 15, 461 Bourke St

Melbourne

03 9604 8489 0407 200 970

[email protected]

LMAA Advantage Clutch Presentation October 2009 (F)

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Transcript of LMAA Advantage Clutch Presentation October 2009 (F)