Theory Of Constraints Handbook - Theory of Constraints Handbook Part 80
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Theory of Constraints Handbook Part 80

Many Mafia Offers are business deals, and as such, are sold differently. The label company is no longer selling labels; they are selling the guaranteed availability of labels based on their customers' actual use or consumption. For that offer to work, the label company will need to supply 100 percent of the labels that are included in the program. In addition, the customer will need to supply daily consumption data for those labels. This transfer of data sounds much scarier than it actually is. Typically, an electronic transfer can be set up to occur automatically each day.

However, the point is that the supplier (the label company) and the customer are more closely integrating. Both sides stand to benefit from this business collaboration. The offer needs to be presented in a way that gets the customer engaged, interactive, and ready to buy. The way to do this is very different from what salespeople do today in a typical sales call.

The biggest issue we see after someone already has a good Mafia Offer is in how it is delivered. So let's talk about that. How should a Mafia Offer be presented? We need to get this right because a good offer, delivered poorly, won't increase sales.

We have already discussed what happens when you go into blah, blah, blah mode-your prospects stop paying attention. Therefore, we need to present our offer in a way that is compelling, gains their trust, and gets them to take action. To improve on my ability to successfully present Mafia Offers and to help my clients successfully present their offers, I've studied and applied some basic psychology. This psychology, combined with the TOC buy-in process, has lead to the success we have had with Mafia Offers and marketing in general.

The Psychology of Delivering a Mafia Offer14

Neuroscience, using a technology called functional MRI, has helped us to understand what part of our brains is involved in making decisions. The outer-most part of our brain (the newest or youngest part) is where rational thinking takes place. The middle part of our brain gives us our gut feelings and all the emotional components related to making a decision. Nevertheless, the decision maker is the core of our brain. This core is the oldest part of our brain and has been called the old brain, the reptilian brain, the first brain, or the limbic system. It doesn't matter what you call it, what matters is that we use (and our prospects use) the most ancient part of our brain to make all of our decisions.

Brain scientist Leslie Hart determined that the old brain is the part of our brain that decides what senses get transferred to the new brain, and more importantly, what decisions will be accepted. (Hart, 1975).

This means that we must better understand how the old reptilian brain makes decisions for us to sell successfully. There is good news and bad news with this. The bad news is that our prospects and we are making decisions at the primitive level of a crocodile or frog. The good news with the old reptilian brain is that it's so ancient and so primitive that it becomes predictable; it's been estimated that the old brain is approximately 450 million years old (Ornstein, 1992). Therefore, if we can understand how to predict what the reptilian brain will do, we can better sell to it.

According to Renvoise' and Morin (2007, 11), the old reptilian brain, besides processing input from other parts of our brain, only responds to six stimuli. Those stimuli are: 1. Self-centered-It's all about me and my preservation.

2. Contrast-Say the same thing I've already heard and I tune out. Say or do something in contrast and you have my attention.

3. Tangible input-Simple, straightforward is best.

4. The beginning and the end-To conserve energy, the old brain may stop paying attention in the middle.

5. Visual stimuli-Visual works best with the old brain.

6. Emotion-Emotion rules. We are not thinking machines that feel, we are feeling machines that think (Damasio, 1995).

Therefore, if we can understand how to apply the use of these six stimuli, we have the key to engaging our customers/prospects in our Mafia Offer. In addition, if we combine this with the TOC solution for sales (Goldratt and Goldratt, 2003)15 and buy-in processes, they may actually decide to buy from us.

So let's review the buy-in process in light of these stimuli. The buy-in process has evolved over time and you can find different versions of it. I'm going to review the steps we typically cover when presenting a Mafia Offer and how we might do them keeping the six stimuli in mind.

Agree on the Problem

Since the old reptilian brain is self-centered and concerned with its own survival above all else, it is highly interested in solutions that will alleviate any pain it's feeling or problems with which it's dealing. That is why humans spend more time and energy avoiding pain or looking to destroy pain than we devote to gaining higher levels of comfort.16 Focus on the problems and pain your prospect is experiencing, not the features of your products or service.

Which magazine do you think men are more likely to buy?17 A men's health magazine with the cover, "Lose Your Gut Fast" or a similar magazine with the cover, "Get Six-Pack Abs"?

One study showed that over 80 percent of men chose the first cover-"Lose Your Gut Fast." Why? People are more interested in avoiding (or reducing) pain than they are in increasing pleasure.

Agree on the Direction of the Solution

Have you noticed that a large portion of all Websites and brochures start with the same sentence, "We are one of the leading providers of ..."? Or, they have a picture of their building on the home page. If you're sitting in a presentation, have you noticed that most start by the presenter expounding on the history of the company?

This blah, blah, blah is the typical way most people approach their market. Such empty claims, neutral statements, or general filling of silence work against you. To reach the old brain you should say (and prove) a contrasted statement because the old brain responds favorably to clear, solid contrast. Powerful, unique solutions attract prospects because they highlight the difference, gap, or disruption the old brain is proactively looking for to justify a quick decision.

Agree the Solution Solves the Problem

Focusing on the unique benefits of your solution is all well and good, but technically it doesn't prove anything. Remember, the old brain prefers tangible, simple, straightforward information over complicated or abstract concepts. It needs solid proof of how your solutions will enable it to survive or benefit. Since the old brain can't decide unless it feels secure, you need to concretely demonstrate, not just describe, the gain your prospects will experience from your product or service-the results of a specific solution to their problem-in a way that satisfies the old brain's need for concrete evidence. So it's not just about value, it's about proven value or proven risk reduction.

This has implications not only for our Mafia Offers, but also for how we approach prospects in our emails, Websites, and brochures. There are implications on how we describe the problem, how we describe our Mafia Offer, and how we agree or prove that our offer will provide the results.

So let's walk through the main components of the label company's Mafia Offer solution for sales presentation and how it might be delivered in light of what we now know about the old reptilian brain.

Here's the typical flow.

We never start with who we are and how long we've been in business and all that typical blah, blah, blah stuff. The old brain doesn't care. We start with something like: "We did an analysis of our industry. We looked at our practices and the practices of our competitors. And we discovered that our practices are having a negative effect on your bottom line. We would like to share and check that analysis with you."

In this way, our opening statement (the beginning) is about them (self-centered) and their bottom line.

Also notice that this is in contrast to what most of their suppliers do.

Agree on the Problem

In the PowerPoint presentation, we start with "Analysis of the Suppliers' Practices." In this part of the presentation, we show how suppliers in our industry (our competitors and us) have a negative impact on our customers' business. These negative effects are due to our practices. Typically, these practices are common across our industry and include minimum order requirements, scheduling practices, lead times, and so on. In this way, we are starting with how our practices are the cause for at least some of their problems. Typically, we will do three slides like the one shown in Fig. 22-3, showing the negative effect our practices have on our customers. Then we summarize in one slide. To deliver to the old brain, we stress that these industry practices are having a negative effect on their business. Again, make it about them.

You also can make the problem visual by adding a picture of mountains of inventory. I also like to generate discussion around these problems because oftentimes there are people in the room who were not aware of the situation or the magnitude of the problem. I want to get them a little emotional about the pain. I might ask, for example, if in fact they have had the experience of having to hold higher inventories due to a supplier's policy.

I can often get someone to tell a story, and if he or she does, I try to make it tangible by asking how much, how big, or whatever the appropriate question might be. When you do the typical sales call-the "show up and throw up" approach-spouting all the features and benefits of your product or service, the customer is automatically resisting and looking for reasons not to buy. By starting with how we negatively affect them, customers are more open to hear what we have to say next.

FIGURE 22-3 Analysis of suppliers' practices.

I can't stress enough how important it is to really nail this first part of the presentation. In no more than four slides and 10 minutes you should be able to describe how your industry (you and your competitors) are having a negative impact on your customers' bottom line. If you can do this instead of the typical "Background of Our Company" and "Background of Our Products," they will be eager to hear what you have to say next, instead of being half asleep.

However, if your analysis was not correct and you have not correctly identified the pain, then you are not going to make a sale, so thank them for reviewing your analysis and leave.

However, if we have our prospect's head nodding in agreement and they have shared a couple of stories, they are actually eager to hear what we have to say next. You are the first vendor that has so eloquently described the dynamics between industry practices and you verbalized it better than even they have or could.

Agree on the Direction of the Solution

Usually I transition by saying something like, "So, if we have accurately captured the problems that our industry causes you, we then need to determine criteria for a good solution."

We then present and review the slide with this criteria and get the prospect's feedback. We also note that this criterion should be used to evaluate any potential solution, even one from a competitor. This is so we can create contrast.

Next, we ask what it would be like if you had a solution that met that criterion. Here we are creating a vision and tapping emotions.

Once we have agreement on the criteria for a good solution, we review our solution-our Mafia Offer. We usually give an overview of our offer and then go into each component of it in more detail. In this way, they get a preview of what's to come-giving them the big picture-and then they can concentrate on what is being presented. The preview method also creates another beginning.

As we are reviewing our offer, we again deliver it in a way to which the old brain can relate. And that, of course, would change for each offer. However, it is very important that you are tangible. Don't just say you have a guarantee, say what it is. Don't just say you will meet the lead time, say what it is.

For each claim or component of your offer, be very explicit about the results they will experience. Gains are typically financial, strategic, or personal. Be as tangible, simple, and direct as possible.

Agree Our Solution Solves Their Problem

After we have reviewed our offer, we return to the criteria for a good solution and ask if our offer has met those criteria. Then we compare our solution, our Mafia Offer or claims, to typical solutions to create contrast.

We explain that the contrast, the difference between us and our competitors, is what leads to the promised results in our offer and we give proof.

There are several types of proof, and here they are in preferred order: customer story or case study, a demonstration, data, or trust me.

Proof of the results your offer will provide is the core of your message. Your evidence must be tangible, factual, and provable. The gains you're touting must be greater than the cost of your product or service to demonstrate the value you're offering.

Close

There are many conventional close techniques out there, but if you have followed the solution for sales and TOC buy-in processes and delivered to the old reptilian brain, you don't need anything fancy. Nevertheless, we also know that the old brain pays particular attention to the end of a presentation. Therefore, the most effective closing technique for the old brain is simple. Renvoise' and Morin (2007, 127131) recommend three closing steps: 1. Repeat your offer one final time because the old brain remembers the end. "We will reduce your inventory by half, reducing the amount of cash you have to tie up, and at the same time we guarantee you will never stock out, reducing your chaos and costs, and allowing you to better meet your customers' needs. And if you ever do stock you out, we will pay you $500 per day per SKU."

2. Next, go for positive public feedback by asking, "What do you think?" If you have a large group, direct this question to a particular person. Then wait for an answer. Waiting is uncomfortable but very important. The psychology of this is beautiful. The responding person will want to remain consistent with any public statement they make, and will later defend their initial position. Therefore, if they take a positive position about you or your offer, you end up with an internal advocate that remains after you leave. It's called the Law of Consistency (Cialdini, 2007).

It has also been found that a small initial commitment will trigger a larger commitment later (Cialdini, 2007). Have you ever noticed that after you purchase something you are more sure of the benefits you will receive? Even though just before you made the purchase decision, you were comparing and contrasting it among several alternatives? Therefore, the initial commitment that the internal advocate makes will lead to stronger statements later.

If the comments you hear are not positive, then you have the opportunity to address any concerns with everyone present. It's better to air any negatives in your presence than to have them arise when you're not around. However, if you have done the Mafia Offer analysis well and have followed the solutions for sales process, then you will have very few, if any, objections.

3. Once you have answered all the questions and addressed any concerns, ask, "Where do we go from here?" Again, be patient and wait for an answer. Their answer is their commitment. The key to invoking the Law of Consistency is to wait for them to state the next steps. When your prospect finally says, "Let's pick a representative portion of labels and trial the proposed solution," it is more likely to actually happen than when you suggest it. Moreover, the person who made the suggestion will become the internal champion for the trial.

Use each presentation opportunity to improve your offer presentation and technique continuously. I find it helpful to have someone along who can help you to gauge your prospect's reaction and document any process deviations that occurred.

For Whom Can You Develop Offers?

Mafia Offers can be developed for each product or service and for each of your market segments. Some companies will have an offer for each product, while others will have offers that vary by market segment. For example, the label company uses the same offer regardless of which label is sold. However, if they decided to go into different markets, they may need a new offer for the new market. This would certainly be true if they decided to make labels for the equipment manufacturers market. In reality, they target new customers who they know suffer the effects of the price per quantity curve and an incorrect forecast.

It is common for our clients to have one or two offers for the products or services they sell in the markets in which they participate. However, there is no right number. If you need to decide which product or service and which market with which to start, you can use the same questions that we listed before: What market do we want to grow?

What market has the best margins?