WORKSHEET #7: Wins and Failures in a Marketplace
Interview a few of the best sales and marketing people in the company to define Win and Fail benefits over each of the last three years. In this step, you would use the Benefit Code Packet you developed in Worksheet #3: Defining the Purpose of Roles. Use the benefits stated in each category of the Customer Buying Hierarchy to define Win and Fail benefits.
Apply these Win/Fail definitions to each instance of volatility in the random customer samples to determine the volatile sales volumes connected with Wins and Failures.
Separate the "Weak Wins" from "Wins" in all instances of Positive Volatility.
Add the total volume of sales from all occurrences of Positive Volatility. For each reason for Positive Volatility, total the volume of sales for the reason and divide that total by the total volume of sales in all instances of Positive Volatility. Convert this fraction into a percentage. Rank order these reasons by percentages. These percentage rankings will give you guidance on the relative importance of the reasons for Positive Volatility.
Separate the total of percentages for "Wins" and for "Weak Wins." The total percentage of "Wins" plus the total percentage of "Weak Wins" should equal 100% of the Positive Volatility. The total percentage of "Wins" equals the percentage of "Wins" in the market (see Analysis 21 and Basic Strategy Guide 7). The total percentage of "Weak Wins" equals the total percentage of "Failures."
Add the total volume of sales for all instances of Negative Volatility. Then total the sales for each reason for Negative Volatility.
Total the sales for each reason for Negative Volatility and divide each reason's sales total by the total sales for all instances of Negative Volatility. Separate the reasons that result in "Failures" from the reasons that result in a loss after a competitor's "Win." Rank order the reasons for "Failures". These percentage rankings will give you guidance on the relative importance of the reasons for "Failures".
Confirm the conclusions the company draws from its random 100 customer sample with the results of fifteen to twenty minute second round random interviews of 25 of the largest two segments of customers that the company might seek. See the introduction to Analysis 66. In undertaking this step, you would use the Code Packet you developed in Worksheet #3: Defining the Purpose of Roles, and the attendant Access or Excel databases, in order to summarize your results.
Once the company has created minimum size breaks for customer size segments based on the 100 results in the random customer sample, the company can define the customers the company has the capacity to serve. Ideally, the company would like to serve the Very Large customer set. However, if it does not have the capability to do so, then the largest customers the company should seek would be Large customers.
If the company is able to serve Very Large customers, then it should define a random sample of 25 Very Large and Large customers. The company conducts an individual interview, lasting 15 to 20 minutes, to determine how these customers buy and to explain volatility. If the company is unable to serve Very Large customers, then the sample of 25 customers for external interviews would include a total of 25 Large and Medium customers.
The information to obtain from each of these interviews is included as Analysis 2 and Analysis 66 in the Tools/Analyses section of StrategyStreet.
It is important for the quality of these interviews that the customer interviewed does not know which company is seeking the information. In order to accomplish this, the company may use temporary employees, such as college or graduate students working over the summer, or external resources, such as consulting or market research firms.