building mafia offers for smbs

Mafia offers

October 23, 2013 – Enterprise Lithuania Conference

1 © 2013 Science of Business, Inc

Why do we improve?

2 2 © 2013 Science of Business, Inc

Dr Lisa


Why Improve? To create more

LEVERAGE

6 week lead-time

Sales 1.0 mm

-TVCs -.2 mm

================

T .8 mm

-OE -.5 mm

================

P .3 mm

To Increase Sales

With the SAME people and resources!


Get More Jobs Done Faster

and Sell to Capacity! 6 week lead-time

Sales 1.0 mm

-TVCs -.2 mm

================

T .8 mm

-OE -.5 mm

================

P .3 mm

3 week lead-time

Sales 2.0 mm

-TVCs -.4 mm

================

T 1.6 mm

-OE -.5 mm

================

P 1 .1 mm

That’s a PROFIT increase of $800,000! 5 © 2013 Science of Business, Inc

Theory of Constraints Results


What are the effects of your

improvements if you..


Assessment – Market Constraint?

• Do you have a market constraint?

– If I could increase your sales tomorrow by 20% could you handle the increase while:

• Being 100% on-time to your first commitment

• Without going into firefighting mode and continuous chaos

• And, at a competitive lead-time

• If the answer is yes, you have a …


Market or Sales Constraint

• If you don’t have enough sales and could handle more and you have a good product/service, the problem could be any one of the following: – Your offer

– How you present your offer

– Your market

– Traffic / Enough Leads

– Conversion

We MUST start with the offer! 10 © 2013 Science of Business, Inc

Why should I buy from you?


Why buy from you?


Pause the video and take 1 minute to have everyone discuss at their table.At the end of the minute collect some responses.

The Generic List

What Everyone Says

• We have outstanding quality and it’s better than

the competition.

• We have a great reputation.

• We get good results for our customers.

• We have very knowledgeable, great employees

with low turnover.

• We’re very responsive.

• We’re very innovative and can help with …

• You can trust us.


So why not just choose based on price? Or just delay the purchase?


A Mafia Offer is where we start

for a Market / Sales Constraint

• “A mafia offer is an offer that is so good, that your customers can’t refuse it and your competition can't or won't offer the same.” Dr Lisa Lang

• It is different from a competitive advantage, unique selling proposition, or a value proposition …


Example

In 2009 Hyundai, due to its Assurance

Program (its Mafia Offer), is

enjoying sales for the year that are up

about 4.9 percent over the same period

in 2008. That compared with about a 40

percent drop for car sales overall.

• And this wasn’t even a great Mafia

Offer because it was copied fairly

quickly. 16 © 2013 Science of Business, Inc

Hyundai 2011 offer


Example

Rollover minutes by AT&T cellular

• Was difficult to follow and still no competitor has matched since 2003

• But then they started to weasel:

– …this plan has the usual gaggle of restrictions.

– “Rollover Minutes is only on local calling plans, and you must sign up for at least 600 peak and 3,000 off-peak minutes for $39.99 per month with a $36 activation fee and a $150 termination fee. Long distance is included, but roaming costs 79 cents per minute.”*

* These may or may not be AT&T current terms and conditions.


Example

The offer


A Mafia Offer is NOT / does NOT …

• based on an innovation

• require new products or new markets

• based on price

• a cutesy tag line

• a list of strengths, a cliché, subjective,

or offered by the competition


Mafia Offer Development Guidelines

• To develop a mafia offer you need to consider 3 things.

– Your capabilities what they are and what they could be compared to the competition.

– How your industries supplies your products/services.

– The impact your industry’s capabilities and how you supply has on your customers.


Mafia Offer Example

• Custom Label Printer

1. Your capabilities what they are and what

they could be compared to the

competition.

2. How your industries supplies your

products/services.

3. The impact your industry’s capabilities

and how you supply has on your

customers.


Is it a Mafia Offer?

• Is it un-refusable to the customer?

• Can the competition match it?

–What’s their lead-time?

–What’s their DDP?


What did it take?

• Reducing lead-times from 2 weeks to

2 days while sales remained constant.

• How was that possible?

They implemented what you read in

the book The Goal www.VelocitySchedulingSystem.com for manufacturers

www.ProjectVelocitySystem.com for project based or service

companies


http://www.velocityschedulingsystem.com/

http://www.projectvelocitysystem.com/

What else did it take?

• They had to challenge how they fundamentally did business.

– Why does the price/quantity curve exist?

They had to rethink their costs and financials …


So not only can’t the competition match the offer – they won’t.



The results?

• The printer’s profits went from break

even to 20% return on sales within 3

months.

• Sales and profits have since doubled.

• And profits are now 25% of sales.

• In 2009, during the tough economy,

they continued to grow but at a

slightly slower rate.


Mafia Offer Benefits

• Increases sales – answers the question “Why should I buy from you?”

• Guides the strategy and tactics for your entire company.

• Forces operational improvement in order to deliver the offer. And gives you a reason to do it!

• Or, helps you to sell the capacity you’ve uncovered through your improvements.


Mafia Offers Benefits

• Changes the culture.

• Can recession-proof your company.

• Can help you recover from a cash constraint.

• The combination of operational improvements and the offer provide huge bottom-line results (LEVERAGE).


Summary

• If you don’t sell the capacity you’ve uncovered through your improvements – you’ve accomplished NOTHING!

• Focus your improvements on creating a competitive advantage.

• Make a Mafia Offer to sell your competitive advantage.


More in on Mafia Offers?

• Get Dr Lisa’s ebook from Chapter 22 of

the Theory of Constraints Handbook,

Mafia Offers: Dealing with a Market

Constraint.

• Available on Amazon or get the PDF

version here:

http://www.scienceofbusiness.com/by-dr-

lisa-lang/mafia-offers-ebook/


http://www.amazon.com/dp/B003RWSL5E?tag=thescienceofb-20&camp=213381&creative=390973&linkCode=as4&creativeASIN=B003RWSL5E&adid=19QXSY965K4E61JMV07Z

http://www.scienceofbusiness.com/by-dr-lisa-lang/mafia-offers-ebook/











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• Some of the topics covered:

•How to FOCUS and Get more Projects or More Jobs DONE •Mafia Offers and the TOC approach to Marketing •TOC Pricing •TOC Measurements •Drum Buffer Rope Scheduling •The TOC Thinking Processes •TOC Leadership

•TOC Supply Chain and Replenishment •TOC Throughput Accounting •TOC Viable Vision and Strategy •Our approach to Quick Quoting using Theory of Constraints •Announcements about TOC events •And much more …


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Results with a Mafia Offer:

• “We have increased our sales by 50% within 9 months of going

out with our offer.” Lane G., Owner

• “We have increased our sales 80% and have been able to move

the constraint from the market back into the operations.”

Alessandro B., VP

• “We landed a new $1 million account within 3 months of our Mafia

Offer Boot Camp. Now that’s an offer!” Paul C., VP

• “We are a current customer of Dr. Lisa and I must say that the

mafia offer that she gave us literally saved my business and

helped us grow sales almost 100% since we started (1 year).”

Grady C., Owner

• “In August ‘07 we had over a 7X increase in premium collet dollars

in just 8 months after going out with our offer.” Richard P., Owner


“Dr Lisa” Lang • “Dr. Lisa” is a renown Theory of Constraints expert and is the foremost

expert in the world for applying TOC to marketing. Dr. Lisa is regularly

sought out for her expertise on developing market offers that increase sales.

She has been named a “2012 Trendsetter” in the USA Today and a

“Manufacturing Champion” in Newsweek for her Velocity Scheduling

System program and her work helping highly custom job shops and

machine shops to become more productive and more globally competitive.

She has appeared in CNBC, CBS, The Wall Street Journal, and Yahoo

Finance to name a few.

• As the President of Science of Business, she invented the Mafia Offer Boot Camp developing over 100 Mafia Offers for fortune 100 companies and other organizations around the globe. Dr. Lisa's Mafia Offers: Dealing with a Market Constraint chapter in the Theory of Constraints Handbook reached the #1 spot on the Amazon best seller list, as did Marketing Miracles a book co-written with marketing legend Dan Kennedy. Dr. Lisa worked with Dr Goldratt, serving as the Global Marketing Director for Goldratt Consulting. She has a PhD in Engineering and is a TOCICO certified expert. She is currently Chairman of the Board for the TOCICO Board of Directors.




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