How to prepare Mafia Offers under Lithuanian Circumstances

Nerius Jasinavičius

TOC sprendimai

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In a strong wind even turkeys can fly

Old proverb

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Let’s do some reality check

Two questions ?

• Do you have some free capacity ?

• Is your market share less than 20% ?

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Reality check

Conclusions

• You have an opportunity for growth

• Your constraint is SALES

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Let’s go and sell !!!

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Houston, we have a problem!

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Myth #1

We (Lithuanian SMBs, UAB “Kažkokia“, ...)

are different !

Unique situation and problems

• Very strong competition

• We are squeezed on prices

• Where to find good sales people ?

• Clients want discounts and discounts

• Hard to balance cash-flow

• Owner working 24/7

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Myth #1

Are we really different ? Is it bad thing to be

different ?

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Myth #2

If you have really good product/service

customer will find you

It is not enough to be good

• Some clients do not know you exist

• Some clients do not know they have a problem (which you can solve)

• Some clients do not know you are better than others

• Some clients do not see/understand the value of your offer

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Myth #3

Marketing is about branding

(and we cannot afford it)

Challenge

• When the details of an offer are not clearly laid out, it is easy to turn even the best sales offer into a mess.

• When the details of the offer are not constructed to mitigate risks and ensuring benefits (to both clients and the Company) the outcome may be losing many good sales opportunities and/or losing profit margins.

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Challenge

• Pursuing wrong prospects is not just a waste of valuable resources (money capacity time ) but it can lead to the “conclusion” that the direction (or the offer) is invalid.

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Before we go and sell marketing has to make sure

• We know our target market (to whom we will sell)

• We have detailed offer to target market

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Myth #4

Selling is an art and only artists can do it

How to convince a specific prospect?

Sales (Converting the market into money)

1. Directly dealing with prospects/customers

2. Closing a deals

Marketing and Sales

Marketing (Creating markets)

1. Building a valuable offer (identifying markets, constructing the offer features)

2. Building the awareness to the offer (marketing channels, advertising)

-2-

F Long sales cycle (Numerous meetings, over a relatively long period of time).

The prospect must consult with others, prior to making the decision (Convincing only on an emotional level becomes a liability). F

The significant debates about the purchasing considerations occur between the meetings, when the salesperson is not present.

F

Most major sales entail a continuous relationship with the prospect. the salesperson and the customer must meet several times after the sale is made. Therefore, it is not easy to separate between the salesperson and the product.

F

A major sale means a major decision – if the decision is wrong, this also means a major mistake – one that cannot be easily ignored or hidden.

F

Major sales require true salespeople, not just clerks who take sales orders.

Characteristics of a major sale

Model for major sales persuasion: Overcoming Resistance to Change

Rational persuasion Overcoming rational resistance to Change

Peeling the layers of resistance

Irrational “persuasion” Overcoming emotional/psychological

resistance to Change

Overcoming Psychological barriers

• There are different kinds of layers. Not all of them exist, but if they do they must be peeled off in a logical sequence. • Trying to peel off an internal layer without first peeling an external one will only intensify the resistance.

1 2 3 4

5 6 7

Rational persuasion: Overcoming rational resistance to Change

HOW TO CAUSE

THE CHANGE?

Layer #7: Yes, BUT there are obstacles to implement the solution

Layer #6: Yes, BUT the solution has negative outcomes…

Layer #5: The solution does not address the whole problem!

Layer #4: I have a different direction for a solution!

Layer #3: The problem is out of my control!

Layer #2: The problem is different!

Layer #1: There is no problem!

WHAT TO

CHANGE?

WHAT TO

CHANGE TO?

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Lithuanian examples of "Mafia-offers"

Non-Lithuanian example

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http://bedfordreinforced.com/wp-content/uploads/2011/06/Standard-Structural-Performance-Guarantee.pdf

1st example

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• Producer of labels and packaging

• Modern and reliable partner • 257 employees • Anual sales 20 mln. EUR • More than 1500 customers in

Lithuania and abroad • 2600 orders a months in

average.

Who we are?

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Why inventory management?

• Shortage in the warehose – lost sales

• Surplus in the warehouse – elimination off illiquid, frozen cash

• Costs of purchase management • Human factor:

– “I think that…” – „Needed it yesterday!!“

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What kind of inventory management?

• Principal attitude: inventory should be managed by technology

• Technology should serve people: – clear, simple, user friendly – specialized by functions

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The solution: StockM DBM What’s next?

• Fear and lack of confidence • 9 months pilot:

– Does it work? – How does it work? – What results?

• Introduction of service for the customers

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Why for the customers?

• Packaging is cheap... Packaging is cheap??

• Big order = small price: – Surplus in the warehouse-

elimination of illiquid – Loss of flexibility – Bad cash flow

• Small orders = shortage: – “Fires”- lost sales – Increased costs of purchase

management • Unreliability of forecasts

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Increase impossible decrease

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Customer inventory management based on StockM DBM (Dynamic Buffer Management) principle

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Reaction

• “Oh, no no...” • “Sounds interesting but it

won’t work in our case” • “I have doubts but let’s try” • Preparation • Pilot project • Discussion of results and

development

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Case study: expectations and results

Sales – Average inventory – Lost sales – Surplus - Turnarounds

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Case study: expectations and results • Lower storage costs – amount of

labels decreased by 48% • Better cash flow – inventory

decreased by 37% • Low/stable purchase management

costs – 46 orders without/minimum involvement of customer

• Required items at the right time - 0 shortages or fires during the term

• Better planning of packaging expenses – fixed price

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Smart warehouse: what did we want to achieve?

– Manage and optimize inventory flow at the customer’s warehouse with no load to customers accounting

system and no changes in it.

– Optimize our production process, improve production planning and inventory control.

– Do not load customer with aditional work, share

data from our accounting system about supplied items.

2nd example

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www.AmVer.lt

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Are you ready ? “Frame of Mind”

Ambitious and possibly “frustrated” by missing opportunity Complacent “Life is Good” – ready to listen, not willing to move Crisis if this does not work - “it’s possibly our end”

Questions

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More info at:

www.VersloAkademija.lt www.TOC.lt

www.AmVer.lt www.CommonSense.lt

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Nerius Jasinavičius

• 7 years management experience in IT, finance, production sectors

• 9 years management experience in business consulting

• Certified LEAN and TOC • Certified management

consultant