Step Two: Selling the Sleeping Bags
T: As you could see, it is often enough to prevent one event in the logical chain from occurring, and the trouble no longer threatens the buyer. But sometimes it turns out that situation is not so simple. What are the next steps of the algorithm?
Consider, for example, the sale of sleeping bags to a store manager who does not have a budget to buy them, although he liked these bags. Lack of budget is just a fear, a hint that buying the bags can brings some kind of trouble. The seller found out that the real threat to this manager would be dismissal for violation of financial discipline.
What rules are violated? The financial discipline of the company. What is the violation? The manager spends more money than is allocated to him. How is this violation usually detected? There is a multi-stage control of documents involved in payment for goods. At each stage of the audit, it can be revealed that this payment has gone beyond the budget of this manager. What excuses could be presented? The rationale is that the investment in these products will soon pay off. What is the limit of violation? Let's say, 10% of the budget excess that is associated with the purchase of sleeping bags.
Why does the manager consider dismissal inevitable? He believes that buying our sleeping bags might happen in the only way: pay for them from the budget allocated to him. This approach involves violating the financial discipline of the company. On the other hand, financial control in the company is organized so that every violation immediately becomes apparent. He needs to exceed the budget by an amount in excess of the allowable cost overrun. Punishment seems inevitable.
And why does he consider dismissal unavoidable? He is afraid that he will be blamed for violation, his behavior will be perceived as unacceptable, and his excuses will not be taken as adequate. Plus, he assumes the allowed cost overrun to be practically zero.
First, we will do the same work as the last time: we will ask the first group of questions and get answers to them.
How could one prevent a violation of financial discipline from being revealed wholly and completely?
S: Divide the payment into parts, then there is a chance that the violation will not be fully revealed. If one pays for sleeping bags immediately, all at once, the violation will be revealed in full. And if one pays in parts, then some parts may be not found.
T: How to prevent a violation of financial discipline being perceived as unacceptable?
S: Make sure that the budget excess is small. Usually they do not punish us for 3-5% of budget excess, this is excusable. But an excess of 20% is considered unacceptable.
T: How to prevent excuses from being perceived as inadequate?
S: Justify the cost of buying the sleeping bags. For example, show that this is an investment that will quickly pay off.
T: How to prevent that it was possible to buy our sleeping bags in only one way: to pay for them within the budget allocated to you?
S: Find other options to pay for your sleeping bags in whole or in part. We have targeted budgets in the store, I can use some of them. I can ask the director of the store to pay the missing part of the amount from his budget. Or I can negotiate with managers from other departments to pay for your sleeping bags together.
T: How to prevent the purchase of our sleeping bags leading to a violation of the financial discipline of the company?
S: Make sure that payments from my budget do not exceed the limit by more than 5%. When negotiating with other managers, the store director, or the manager of the “target” budget, I should ensure that their payments do not go beyond this limit either.
T: How to prevent, under the existing financial control in the company, this violation immediately become apparent?
S: Pay for your sleeping bags monthly. Then the first payments will remain within my budget. Then, when the first intermediate results appear, it will be easier to justify further payments by the fact that I need to bring the purchase to completion in order to get the promised results.
T: Well, not bad! The resulting solution can be described as follows: divide the payment for product into stages, for example, on a monthly basis; arrange with other managers, the store director and the target budget manager to jointly pay for sleeping bags; at the same time, try to ensure that each participant does not go beyond his/her budget by more than 5%; try to get intermediate results so that it is easier to attract other participants and justify the costs to management.
The solution is not bad, but so far it looks vague, too general. In order to implement it, it should be filled with specifics.
Here it is useful for us to recall: why did we tackle this problem? To teach our customers how to circumvent the requirements of financial discipline? This is not our goal. Our job is to sell our sleeping bags. If we combine this goal with the task of making the solution specific, it becomes clear that it would be nice to use the features of our sleeping bags.
Why? If the features of our sleeping bags allow us to implement this solution, it convinces the manager to buy them. These features not only benefit the store, but, they also protect the manager from troubles. So, the second step of our work is to use the features of our sleeping bags to make the general solution implementable. How could we carry out each of the actions included in this solution using our knowledge about the features, capabilities and benefits of our sleeping bags? In abbreviated form, the question is, “How to perform this action using the features of our sleeping bags?”
How to divide the payment into stages, for example, monthly, using the features of our sleeping bags?
S: It’s summer, people are camping and buy a lot of sleeping bags. But while it’s hot, they are not worried about protection from the cold. We could’ve advertised the thicker insulation as a “thicker and softer mattress.” But I’m not talking about that. If you deliver bags to us once a month, we will pay for each shipment separately.
T: How to negotiate with other managers about joint payment, using the features of our sleeping bags?
S: I am the manager of the tourism department. Where else can you sell your sleeping bags? In the boating department, especially if you have the option of waterproof fabric. By the way, it would be nice to think whether it is possible to use a sleeping bag as a life-saving tool. You can also sell them in the departments of hunting and fishing.
T: How to negotiate a joint payment with the store director using the features of our sleeping bags?
S: It would be nice to find out what benefits selling your sleeping bags could bring throughout the store.
T: How to agree with the person who manages the target budget on joint payment using the features of our sleeping bags?
S: We have, for example, a targeted budget for advertising and marketing. If you provide us with your marketing and promotional materials, then the purchase of part of the sleeping bags can be carried out through this budget, for a targeted marketing event.
T: How to ensure that each participant does not go beyond their budget by more than 5%, using the features of our sleeping bags?
S: It’s simple. Everyone should purchase as many sleeping bags as his budget allows.
T: How to get intermediate results using the features of our sleeping bags?
S: You need to conduct immediately some kind of marketing event in which your sleeping bags will be sold. Then it quickly becomes clear that they are being sold fast, and their sale is beneficial to our store.
T: How to justify the costs to management, using the features of our sleeping bags?
S: For the management of our chain of stores, the main indicator is the profitability of the procurement of goods. If you can show that the sale of your sleeping bags is beneficial for the store, that their purchase pays off quickly, and they are sold faster than others, you will probably be able to convince management.
T: Now something more specific has turned out.
S: This approach, as it were, brings us back to what we are here for. What is our interest in arranging coaching for a customer in improving his business? We do not pay for it. But when we use our product for the solution - it works like a funnel, it reduces everything to what we sell, to our product.
T: Yes, you just expressed it - it works like a funnel.