The 4 P’s: Product Portfolios

We talked about launching New Products last week.  This week I want to step a bit back into why those products were launched and that is the topic of Portfolio Management.  What is Portfolio Management?  It is the understanding of the positioning of Products and Services that you have to sell.  For most every business, things break down by Pareto: 80% of the Money comes from 20% of the Products.  I have been in places where we had to offer things that did not sell very well so that we could let our customers meet their regulatory obligations.  But no matter what the Gross Margin was on those Products, we never recovered the investment in them directly.

I want to explore this from two standpoints.  First, I want to talk about reducing the number of Products and Services that you offer.  Then, I want to talk to you about how to grow them more efficiently.

No matter what you do, you should be keeping track of the total Sales by individual Product Category or SKU (Stock Keeping Unit).  Over time, you should be evaluating what Products and Services make the most amount of money for you.  You should be looking at the lower 1/2 of that list and deciding which Products you will stop selling.  This is especially true for products that are close in the customers eyes.  By having some additional differentiation, it helps customers to choose the right thing for them.  Think of going into a grocery store.  Which one of literally a dozen competitors is the right one for you.  In the store’s case, it is watching inventory to see what works.  If Products don’t move, then they are no longer sold.  What are you doing to watch your Products?

But for a lot of companies the easiest way to expand sales is to look for companion purchases.  These are natural extensions for people that buy a particular Product or Service.  For Cell Phones, that might be cases or insurance.  When a customer buys a Phone they might want to protect their purchase.  This can be done physically with a case or financially with insurance.  In either case (or sometimes both), there is a natural point in the Sale where the customer can be asked about this.  These type of add-ons can be extremely profitable.  They have almost no cost of sale.  You are marketing them to customers who you are having direct conversations about the Product they just bought and you don’t have to have a high take rate (the percentage of customers that buy an add-on) to have a significant financial impact on your business.

Before you thinking about launching a new Product or Service, let’s take a look at the performance of our current portfolio.  If you ever have questions on this, feel free to contact me.  Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

The 4 P’s: Product Launch

Most companies seem to be pretty good about doing what they do.  The one thing that they tend to be really bad at is Product Launch.  This is the introrduction of new Products and/or Services into the market.  Companies seem to be able to get the Product or Service available.  What they have an issue with is the Sales of these newly introuced Products.  I want to talk about what I have seen, this will be generalized as it comes directly from my experience with customers.

I think the first thing that goes wrong is the Inside/Out perspective that I talk about as part of Alignment.  In general, a vendor is not the most important thing to any customer.  Just because you have something new, don’t expect anybody to realize it.  You have to have it in front of them more than one time for it to stick.  They know about you for what they buy from you.  They may not realize that you do more than what you did together in your first transaction.  It is important at all times to keep an Outside-In view – in other words a view from the perspective of the customer.  If you do that, you need to think about how they will consider you in this new context.

And it is Context that is the second point.  Context in this case is that the Products/Services are likely to be adjacent in customer base or service to your original Products/Services.  This means that the customer buying is slightly different or that they are buying it for a slightly different reason.  You are likely to have new competitors and a different value proposition.  This positioning must be done during the introduction to the market of the new Products and Services.  It is important that people see the new Product as filling a niche in the market all on its own.  This is true even if you expect to do most of the Sales as part of the bundle.

The third point is that the introduction of these Products/Services require separate goals and objectives.  An expanding market or growing company might cover up for the failure of a new Product to succeed.  But if the Product is going to succeed, then we need to find the path to success for it.  The only way to do that is to set up a plan with metrics and adjust it over time.  Without the plan and the metrics, the Product or Service will not get the attention it deserves nor will it be adapted to the conditions as they happen.

Finally, there needs to be a level of completeness to the Launch.  This means that current customers need to be notified.  New potential prospects as well.  Websites need to be updated.  Marketing materials need to be created.  Sales needs to be trained on how to sell the new Products/Services.  Winning anecdotes need to be spread to overcome the fear that comes with new Products in Sales.  Without that comprehensive plan and execution, new Products are never given a chance to win.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!

Sonoma County: News and Notes

This Friday (March 17th) my BNI (Best Networkers in Town) is having an Open House.  We will be having a Special Presentation by Dawn Lyons of Asentiv.  She will be teaching us all about techniques in Referral Marketing.  The group will also have a wonderful breakfast waiting for you at Legends starting at 7AM.  You might want to show up a bit earlier to meet the 75+ business people that will be there.

One of those people will be Duane Vos of Creative Window Fashions.  They have a store in Rohnert Park that you can see on the West side of 101.  Creative Window Fashions is a Hunter-Douglas dealer and have a beautiful showroom.  I wanted to learn more about this fine Business and recently talked to Duane.

Jim Sackman:  Given your 25 years in the Window Covering Business, what makes Creative Window Fashions a great company to use?
Duane Vos:  We are all about delivering excellence in Customer Experience.  This goes from our ability to help the customer choose the right products through the installation all the way to any repairs that might be needed.

JS:  What is new that is happening in your business?
DV:  Business is excellent and we are taking this opportunity to bring the same quality showroom experience to Marin County.  This summer we will be opening a new Store in San Rafael.  It will be located right next to City Carpets at 555 Francisco Blvd. East.  We expect to be able to bring that same Diamond Certified quality to a new audience.

JS:  I know Diamond Certified is a mark of quality.
DV:  Yes, it requires verified customer quality.  On top of that, we have excellent reviews on Yelp! which should help people be able to see the reasons to work with us.

JS:  Is there one thing that working with you can help raise the value of their home?
DV:  Absolutely, the easiest way to raise a home’s value is by installing shutters.  This is the single best thing that they can do to raise the value of their home.

JS:  And what is new in the industry?
DV:  Right now there is a lot of activity in motorized shades.  There are a number of children that have been harmed by cords, so there is a move to eliminate them.  We now have a blind that is motorized, but you can still manually open or close it.  This will save people a lot of trouble with possibly burning out their motors.

I would like to thank Duane for his time so that I can learn more about Blinds, Shutters and Custom Shades at Creative Window Fashions.  Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!

Sonoma County: News and Notes

This Friday (March 17th) my BNI (Best Networkers in Town) is having an Open House.  We will be having a Special Presentation by Dawn Lyons of Asentiv.  She will be teaching us all about techniques in Referral Marketing.  The group will also have a wonderful breakfast waiting for you at Legends starting at 7AM.  You might want to show up a bit earlier to meet the 75+ business people that will be there.

One of those people will be Duane Vos of Creative Window Fashions.  They have a store in Rohnert Park that you can see on the West side of 101.  Creative Window Fashions is a Hunter-Douglas dealer and have a beautiful showroom.  I wanted to learn more about this fine Business and recently talked to Duane.

Jim Sackman:  Given your 25 years in the Window Covering Business, what makes Creative Window Fashions a great company to use?
Duane Vos:  We are all about delivering excellence in Customer Experience.  This goes from our ability to help the customer choose the right products through the installation all the way to any repairs that might be needed.

JS:  What is new that is happening in your business?
DV:  Business is excellent and we are taking this opportunity to bring the same quality showroom experience to Marin County.  This summer we will be opening a new Store in San Rafael.  It will be located right next to City Carpets at 555 Francisco Blvd. East.  We expect to be able to bring that same Diamond Certified quality to a new audience.

JS:  I know Diamond Certified is a mark of quality.
DV:  Yes, it requires verified customer quality.  On top of that, we have excellent reviews on Yelp! which should help people be able to see the reasons to work with us.

JS:  Is there one thing that working with you can help raise the value of their home?
DV:  Absolutely, the easiest way to raise a home’s value is by installing shutters.  This is the single best thing that they can do to raise the value of their home.

JS:  And what is new in the industry?
DV:  Right now there is a lot of activity in motorized shades.  There are a number of children that have been harmed by cords, so there is a move to eliminate them.  We now have a blind that is motorized, but you can still manually open or close it.  This will save people a lot of trouble with possibly burning out their motors.

I would like to thank Duane for his time so that I can learn more about Blinds, Shutters and Custom Shades at Creative Window Fashions.  Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!

This Friday (March 17th) my BNI (Best Networkers in Town) is having an Open House.  We will be having a Special Presentation by Dawn Lyons of Asentiv.  She will be teaching us all about techniques in Referral Marketing.  The group will also have a wonderful breakfast waiting for you at Legends starting at 7AM.  You might want to show up a bit earlier to meet the 75+ business people that will be there.

One of those people will be Duane Vos of Creative Window Fashions.  They have a store in Rohnert Park that you can see on the West side of 101.  Creative Window Fashions is a Hunter-Douglas dealer and have a beautiful showroom.  I wanted to learn more about this fine Business and recently talked to Duane.

Jim Sackman:  Given your 25 years in the Window Covering Business, what makes Creative Window Fashions a great company to use?
Duane Vos:  We are all about delivering excellence in Customer Experience.  This goes from our ability to help the customer choose the right products through the installation all the way to any repairs that might be needed.

JS:  What is new that is happening in your business?
DV:  Business is excellent and we are taking this opportunity to bring the same quality showroom experience to Marin County.  This summer we will be opening a new Store in San Rafael.  It will be located right next to City Carpets at 555 Francisco Blvd. East.  We expect to be able to bring that same Diamond Certified quality to a new audience.

JS:  I know Diamond Certified is a mark of quality.
DV:  Yes, it requires verified customer quality.  On top of that, we have excellent reviews on Yelp! which should help people be able to see the reasons to work with us.

JS:  Is there one thing that working with you can help raise the value of their home?
DV:  Absolutely, the easiest way to raise a home’s value is by installing shutters.  This is the single best thing that they can do to raise the value of their home.

JS:  And what is new in the industry?
DV:  Right now there is a lot of activity in motorized shades.  There are a number of children that have been harmed by cords, so there is a move to eliminate them.  We now have a blind that is motorized, but you can still manually open or close it.  This will save people a lot of trouble with possibly burning out their motors.

I would like to thank Duane for his time so that I can learn more about Blinds, Shutters and Custom Shades at Creative Window Fashions.  Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!

The 4 P’s of Management

I want to talk about a Model of understanding time horizons in a business so that Owners and Executives can think about their business.  I talk about this Model as the 4 P’s:  Products/Projects, Process, Plans, and People.  It is this model that I want to explore over the next few weeks.

Products and Projects are the work and products that are going on today.  This represents the “Technician” in the E-myth model.  This is very important in all businesses as it dominates near term viability of the business.  Every day a business needs to execute its current business so that it has the money to be in business tomorrow.  There is no question about the importance of today.

Process is my view of the mid-term outlook of a business.  This is 6 – 18 months out typically.  Every business needs to look at the current business and account for inflationary pressures and think about how it will grow in profitability.  That means that there will need to be changes in the way the business is executed today.  How will you scale revenue?  Can you do what you do today for less cost or with fewer people?  All of that looks not just at changes in the top line but at the bottom line as well.

Plans are all about the long term strategy for the company 3 years to 5 years out.  Think about how the market that you are in is going to change.  How will you prepare your company for that potential future?  This is the trajectory that is most likely to require change in any business.  Many business owners think that they will have a status quo for the foreseeable future.  This is just not true.  Think of the taxi companies that are being eaten up by Uber.  Don’t let this happen to you!

Finally, there are People.  People are the core of any business in the long term.  If you want to fulfill your Plans, you will need the right people both inside and outside the organization.  How are you finding the right people?  Are you onboarding them well?  Are you providing ongoing training and support?  Are you retaining the best talent?   This is your biggest job as a leader.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!

Net Neutrality Friday

Last week I talked about defining a vision of what we want.  Today, I want to outline the major choices for this vision and then we can explore these choices deeper over time.

As we have looked at the problem of getting more universal broadband at higher speeds deployed, there are fundamentally two camps.  The first camp wants this to be done by increasing competition.  The second camp wants to do this with additional regulation.  In order to get additional competition, there might actually be a requirement for increased regulation.  By changing the regulatory paradigm, we might actually get increased competition.  Let me start with the additional competition camp.

You probably have read about or know some folks that want overbuilders or municipal networks to be created.  This is how people see additional competition being created.  Overbuilders are those non-incumbent providers who build their own facilities.  The largest example would be Google Fiber, but there are many regional and local examples of this type of player.  Some of these players work with or are started by the local community.  Project Utopia in Utah is such a network.  There has been mixed results with these types of networks, often blaming the incumbents for the failure of the network.

The alternative is to go back in time and create a regulated utility network like we had with Phone Service prior to the breakup of AT&T.  In this case, regulators (State PUCs and FCC) would have to build a plan to have the utility follow in order for it to operate effectively.  The challenge with this is structural.  These utilities are now mixed in with non-utility elements of the business.  The good news is that if could define a common way for this network to be built, we might be able to spur additional service competition.

I want to note that this is focused on Residential Networks.  Business networks have had both a wholesale and retail component for some time.  The question is how do you choose which path to follow.  By default, we are on the attempting to increase competition path.  I would argue that not much is going to change on this front unless people get exasperated by the cost and availability of high speed networks.  For all the complaining about this topic, it has not actually generated a lot of will for change.

So, I will expand down this branch first.  Have a great weekend!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!

Sonoma County:  News and Notes

This week we look at the last of the 4 stocks that I track, Autodesk.  This company is going through the business model change that I have discussed and I want to analyze that change a bit.
First off, let’s give you the big picture numbers.  Revenue was $478M and the company lost $0.28 per share.  This was considered better than expected.  A couple of other numbers is the “new model subscriptions were at an ARR of $529M for a total of 1.1M subscribers.  It is this last bit that I want to talk about.  I would be remiss if I didn’t note that total ARR was $1.6B from 3.1M subscribers.
Time for some definitions.  ARR stands for Annualized Recurring Revenue.  What this means is that if you look at the subscription revenue of today and got it for all 12 months of a year, you would make a certain amount.  So, $529M ARR means that the company has subscriptions of $44M a month for the new model.  This new model is the rental of the software that Autodesk creates.  They had older subscriptions for service, but they have stopped selling packages and now only rent them.  This is the key to Autodesk’s future.
The whole point of this model is that every month is the same.  That instead of big bumps when new software comes out, there is a smooth income of money from the software that people rent.  There is one other number that we need to get in here and that is Total Spend.  Because of the business model change, it is hard to separate out Cost of Goods Sold (COGS) from Operating Expenses (OPEX).  The non-GaaP Total Spend at Autodesk was $560M.  On a monthly basis this would be $187M a month.  That is the number that the company needs to reach to cover its expenses.
If I take an average of $44M per month at 1.1M subscribers, I end up with $40 per subscriber per month.  If I needed to cover all $187M with that amount, I would need 4.7M new model subscribers.  The good news is that there are these older subscriptions that account for $89M per month in revenue.  If that remains constant, then I only need $98M from the new model.  This equates to 2.5M subscribers, not too far out of reach.  Additionally, the company could look at ways of cross marketing its products.  This would mean the average monthly bill went up.  If the average bill was $86 per subscriber, the company would be in good shape as well.
I am sure that Autodesk will be looking at both methods simultaneously and the number of new subscribers and the average value per subscriber will not need to be that high.  The one number we don’t know is churn.  How many subscribers exit the new model?  We just don’t know.  But that should give you some things to think about in choosing whether to put money into Autodesk.
Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing Strategy
Change Your Business – Change Your Life!
Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!