How Configurable Products/Services Become Profitable

 

 

Companies with configurable products or services often live with the severe operational pain and gridlock. Many see the pain and low margins as a cost of doing business. Here are some questions to ponder:

• Which of the great companies of the world want to offer more personalized solutions but can’t because the technology doesn’t yet exist within their firewall to efficiently support personalized solutions? Is your company one of them?

• How many companies are stuck in the mass production paradigm as technology doesn’t exist to support a mass customization business paradigm? Is your company one of them?

• Which of the great companies of the world won’t embark upon an effort to better support customized products due to perceived business and technical risks? Is your company one of them?

• How many CIOs would step up to lead the development of a holistic, end-to-end solution? I don’t know of any. Is your company one of them?

What if a company offered a plug and play solution that, with minimal customization, would take the pain and complexity out of offering configurable products from quote to cash collection? How valuable would that be?

This is my Dawn Wall Project I wrote about a few weeks ago. It’s about making the complex simple.

Is your company in need of this solution? Call me.

Thought for the week:

“Complexity is your enemy. Any fool can make something complicated. It is hard to keep things simple.” -Sir Richard Branson

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What do you think? I welcome your comments!

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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2015 Gardner & Associates Consulting  All Rights Reserved

Note:  This posting is based on my weekly “Thank God It’s Monday” that helps you and your company thrive! To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Getting Configurable Product Orders Right

A reader wrote: “My company has configurable products and we are having problems getting the right parts delivered to support installation of the customers’ orders. What ideas do you have to resolve this?”

The first question I would ask is did the process for shipping custom, configurable orders ever work well? If you answer “yes,” then you need to ask yourself “what changed?” If you answer “no,” then it would be clear you never had a working process and that is your starting point.

If something in the process changed, you need to take action to bring the process back into compliance so it works properly and is repeatable.

If nothing changed, you need to create and follow a process that ensures you are shipping the right parts to complete the order.

If the answer you receive is, “it’s too hard to do it right,” then I encourage you to look at the problem through the eyes of your customers and/or dealers. If your customers and/or dealers are experiencing challenges satisfying the customer the first time, that negatively impacts your brand reputation.

When order execution goes poorly, people talk about it. If you don’t believe that, just look at Yelp, Facebook or Twitter to see how brand reputations become tarnished. Companies delivering a poor customer experience aren’t long for this world.

Finally, you may need to innovate your current process to meet the needs of your business if variety and complexity has gone beyond the capabilities of your current systems and processes. This is how you accelerate growth.

Photo Courtesy of John Hritz on Flickr

Thought for the week:

Heard through @coryedwards

81: The % of US consumers that say that it is important that brands make my life easier.#DigitalDopamine from @razorfish

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What do you think? I welcome your comments!

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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2014 Gardner & Associates Consulting  All Rights Reserved

Note:  This posting is based on my weekly “Thank God It’s Monday” that helps you and your company thrive! To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Super Bowl 47 Winners and Losers

Note: This posting is based on my weekly “Thank God It’s Monday” that helps you and your company thrive!

This week’s focus: Super Bowl 47 Winners and Losers

Congratulations to the Baltimore Ravens for a terrific season and Super Bowl victory. Well played.

Winners: Beyonce, Alicia Keys, Jennifer Hudson & The Sandy Hook Choir, the Jeep ad with Oprah Winfrey honoring those who serve in the military, the Dodge Ram ad with the late Paul Harvey honoring farmers, the Best Buy ad with Amy Poehler, the Budweiser Clydesdale ad, and, finally, the Taco Bell ad about senior citizens partying. Bravo!

Losers: San Francisco 49ers, the New Orleans power grid.

The Big Loser: Go Daddy for an uncomfortable, pointless, brand-damaging ad. I’m no prude, but personal displays of affection such as that depicted in this commercial are despicable and made me and my wife cringe. I turned away from the TV. In working with a client last year, I found Go Daddy to be professional and competent. This ad undermines Go Daddy and its brand. While Go Daddy’s goal may have been to get people talking about their brand, I’m not sure they will get a positive outcome they were looking for. They certainly face an uphill battle attracting female entrepreneurs to use their services. And, I wouldn’t use them for any reason.

So, some advertisers thrived and others crashed and burned. And, so it is every Super Bowl.

Thought for the week:

“The bad news is time flies. The good news is you’re the pilot.” – Michael Althsuler

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What do you think? I welcome your blog comments!

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Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2013 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

The Continuum For Configurable Products and Services

Note: This posting is based on my weekly “Thank God It’s Monday” that helps you and your company thrive!

This week’s focus: configurable products and services

There are few things based on absolutes. Most principles exist on a continuum. People with food allergies have varying degrees of adverse stimulus response to the same allergen. Customized, configurable products and services are no different–they, too, exist on a continuum.

Not every product or service has to be a 10 in terms of feature or option quantities or complexity to be successful in the marketplace. Providers of configurable products and services are in charge of setting and managing their own continuum.

The decision made today about how configurable to be doesn’t have to be set in stone. The continuum can change as the market changes and evolves or as your capabilities and ability to manage and offer configurability evolve.

Configurable product and service providers already know that they aren’t in a “one-size-fits-all” world. It follows then there is no “one-size-fits-all” answer about the degree to which your products and services have to be configurable. The key is to hit the marketplace sweet spot. This will help you thrive.

Thought for the week:

“Fear less, hope more;
Whine less, breathe more;
Talk less, say more;
Hate less, love more;
And all good things are yours.”
– Swedish proverb 

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What do you think? I welcome your blog comments!

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Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2012 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Scaling Business for Configurable Products and Services

Note: This posting is based on my weekly “Thank God It’s Monday” that helps you and your company thrive!

This week’s focus: configurable products and services

If your company offers configurable products or services that are complicated to sell, you will lose out on sales opportunities and, ultimately, undermine growth if you don’t have an appropriate guided selling solution.

Too many companies view selling inefficiencies as a “cost of doing business” and fail to address this need before the company hits the wall. The issue boils down to being able to efficiently configure, price and quote based on a customer’s unique requirements using configurator tools provided. If it’s too hard, too complex, or takes a disproportionate amount of selling time, your sales team and channel will not invest the time and energy.

How do you know here are storm clouds on the horizon? Subject-matter experts are required to hand-hold sales, dealers and/or customers through the configure-price-quote process. You rely on people rather than an appropriate tools. Your current process isn’t scalable and won’t perform as the business grows.

If your company is acquired by a company, the acquiring company and its channel partners may quickly turn-off to selling your product undermining the growth potential and value for both companies if you haven’t provided an appropriate guided selling solution. Remember, in a large, diverse company, your value proposition is but a few line items of a larger company’s offerings. You compete for mind share. If you make it easy, you win. If it’s hard, you lose.

If you are experiencing these challenges, isn’t it time you invested in correcting this so you, your dealers and sales people can thrive?

Thought for the week:

“This Veterans Day (November 11th), let’s thank all those who have served our nation in uniform and remember those who made the ultimate sacrifice.” – U.S. Senator John McCain

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What do you think? I welcome your blog comments!

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Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2012 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Customization doesn’t bring efficiencies

Note: This posting is based on my weekly “Thank God It’s Monday” which is offered to help companies thrive!

This week’s focus: configurable products and services

Being a “customizer” doesn’t create efficiencies. More often than not, customization brings tremendous inefficiencies in sales, order administration, engineering, manufacturing operations, service, etc.

• Your team is forever chasing experts to answer and resolve normal, routine configurability questions that arise.
• You require significant human intervention to accommodate complexity and variety simply because information isn’t available–the business isn’t set up properly.
• Your team is challenged to pull together quotes for products and services that can actually be delivered.
• Your team is challenged by the fact that nothing is standard; everything is a special.

Companies must evolve their business processes to cost-effectively meet the challenges product and service complexity bring. If customizers don’t take action to improve efficiencies, they will continue to suffer margin and operational challenges that only mount.

Failure to address these challenges will keep you and your company from thriving.

Thought for the week:

“Don’t confuse enthusiasm with commitment.” – Paul J. Silvia

What do you think? I welcome your blog comments!

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Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2012 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Dave Gardner’s “Thank God It’s Monday” 19MAR12

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

Why is it so many companies that offer configurable products and services are so ill-equipped to deal with the customer-facing side of the business? Here are 3 key reasons:

• When the business started, the focus was on the product, not on how products would be configured, priced and quoted–the processes never caught up

• The inefficiencies and operational challenges are seen as a “cost of doing business”

• Your ERP system is optimized for a different business paradigm: mass production

The result is margin leaks–margin leaks amounting to 3% or more of revenues. How much is that costing your company year after year in real dollars?

What if you could add 3% or more to your bottom line? How would that change the valuation of your business? How would more effective processes favorably impact customer relationships and your customer’s experiences?

The cost of correcting these problems is trivial compared to the annualized cost of the problem. Solving this problem will help you and your company thrive.

[Note: Here are self-assessment tools to help you determine where your company stands.]

Thought for the week:

“If everyone is thinking alike, then somebody isn’t thinking.” – George S. Patton

What do you think? I welcome your blog comments!

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Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2012 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Product Configurator, Configure, Price, Quote Top Challenges

Based on my experience, a few of the top pains include:

* Not approaching this challenge holistically across the enterprise–the configure-price-quote (CPQ) process is disconnected from back-office processes

* Focusing on CPQ as a back-office process rather than a tool and process to engage customers

* Not establishing a product management function that owns the evolution of products and product lines

* Not creating and engaging cross-functional product teams who own the success and profitability of a product line

* Thinking the product configurator technology is going to solve all the problems

* Selecting inappropriate product configurator technology

* Continuing to “engineer-to-order” rather than pre-engineering around product modularity and offering previously rationalized choices within a coherent system for CPQ

* Not having a sustainable, scalable process for adding new features and options

* Trying to be all things to all people leading to an unprofitable or low margin business that is not sustainable while you hope that things will get better–hope is not a strategy

* Not having and engaging in a strategy to drive down the cost of variety

I write about this in my book: “Mass Customization: An Enterprise-Wide Business Strategy” available at Amazon.com. You can read more about it at www.happyabout.com/mass-customization.php

What do you think?

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2011 Dave Gardner

Dave Gardner’s “Thank God It’s Monday” 13JUN11

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

Out with the old; in with the new. Acer had to write down $150 million in European inventory just this past week as the inventory had passed its prime.

The mass production paradigm comes with a substantial potential cost penalty: what doesn’t sell must be deeply discounted or written off. Want proof? Look at all the “end of season” sales–40% off, 50% off, 70% off and more.

Why does this happen under mass production? It is nearly impossible to align supply with actual demand. Is there a solution?

Build to order postpones committing inventory until a named customer appears. While it doesn’t totally eliminate risk, it can reduce the risk of finished goods inventory obsolescence dramatically. This paradigm can help a company thrive.

[Read my entire Fast Company Expert Blog post: The High Risk of High Tech Inventory.]

Thought for the week:

“At first dreams seem impossible, then improbable, then inevitable.”  – Christopher Reeve

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What do you think? I welcome your blog comments!

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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2011 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Dave Gardner on customization and personalization

Dave Gardner was interviewed by Dr. Amy Vanderbilt on her TrendPOV show titled Market of One–Using Individualization For Advantage to discuss customization and personalization, how to use it effectively to dominate your market, and how not to lose your profits by customizing the wrong way.

Here’s the link to the interview.

What do you think?

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

Dave Gardner’s “Thank God It’s Monday” 17JAN11

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

Companies with highly configurable products and services need to combine the superiority of their offerings with operational excellence, seamlessly connecting customers to the enterprise. You will know you’re there when the hand-offs from organization to organization resemble the efficiency of an aircraft carrier flight deck.

If your company continually experiences pain associated with configuring, pricing or quoting, there is a misalignment between what your customers and your company needs and what you have. Correcting this misalignment will help your company thrive.

Thought for the week:

“You never know when a helping hand will change another person’s entire life.”  – Zig Ziglar

Note: I welcome your blog comments!

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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2011 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Dave Gardner’s “Thank God It’s Monday” 08NOV10

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

The reason most ordering environments for configurable products and services are so challenging is that they cannot easily accommodate “exceptions.”

Non-conformity to standard, e.g., “I want it just like this but…,” requires 10 people to put their heads together to figure out how to handle an exception that never should have been an exception in the first place.

Companies that provide configurable products and service must pre-define a relevant set of options and allow people to order within the parameters provided.

The more “a la carte” product and service providers can be, the happier their customers and employees will be ensuring the company thrives.

Thought for the week:

“Don’t be pushed by your problems. Be led by your dreams.” -Unknown author

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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2010 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

How to excite a la carte customers

Customers expect companies to offer more than a “one-size-fits-all” product or service. The à la carte customer^TM wants to be in control of what they buy. A prospective customer wants to know what is available, at what price and, if we’re talking about a manufactured product, how long it will take to produce.

Traditionally, companies with configurable products and services build and maintain elaborate, electronic menus—often referred to as “configurators”—that describe the array of options available. Many companies offer so many choices that prospective customers are overwhelmed leaving them to wonder, “Where do I start? How do I begin to understand what product or service is appropriate for me?” For example, Dell’s website, dell.com, offers a vast array of choices yet does not go far enough in helping a prospective customer converge on the best solution based on their individualized needs.

Most companies discuss their products and services using industry-centric language which may align poorly with the language and expertise of the prospective customer. If a prospective customer doesn’t understand a company’s lingo, there’s going to be problems. Here’s an example.

Imagine you have just arrived in Malaysia and you are taken to a local, traditional buffet. You know nothing about the food you see. Some things look like insects, some things look raw—you are going to have many questions. There will be language differences that make it difficult to communicate with your local host. There will be a lot of “yeses” and head nodding but you wonder, “Did she really understand that I can’t tolerate anything spicy? When she tells me it’s not spicy, can I trust she understands my definition of ‘spicy?’” It is no different speaking to a prospective customer who does not possess expertise about your products and services.

If a company does a poor job of helping prospective customers make appropriate choices through its selling tools, it forces the prospective customer to speak with someone to help them figure out what to buy or, worse, turns the prospective customer toward competitors who more effectively help an individual decide what they need to buy.

Sometimes, a prospective customer will connect with a knowledgeable sales agent and, at other times, the customer will speak to a sales agent who knows little more about the company’s offerings than the prospective customer. The prospective customer has no means to determine the skill and expertise of the sales agent taking their call. If the product or service doesn’t meet the customer’s expectations, the customer may never buy from that company again. The unhappy customer is likely to share their negative experience with others.

Most configurators fail to offer what prospective customers really need. What are the best practices that companies of configurable products and services must employ in next-generation configurators?

• The configurator needs to be assistive to the prospective customer and the sales agent. Prospective customers require more than a “product selector” or “service selector” as traditional configurator solutions are presently constituted. Prospective customers need much more than an elaborate menu presented with little guidance about how to order or configure a product or service tailored to their individualized needs. Consider the trusted advisor role a waiter satisfies in a high-end restaurant—the waiter provides guidance and expertise to help the customer order a wonderful meal from a myriad of possibilities.

• Configurable product and service providers must offer guided selling solutions that teach a prospective customer how to buy based on the essential mission or application required of the product or service. To do this requires matching customer-required attributes with attributes inherent in certain products and features.

• Prospective customers need to know they are selecting the appropriate product or service based on attributes they have previously been prompted to provide. It is far better to fit the solution to the customer’s actual needs than let them buy something based purely on price that will disappoint them later.

• Configurable product and service providers need to provide different entry paths to help a prospective customer converge on a solution—the tools must help the novice or infrequent purchaser as well as the expert.

• Prospective customers need to have the opportunity to learn about products and services they never dreamt existed, creating excitement and engagement.

Has any company created what I call the “next-generation configurator?” Not that I am aware of. Most companies that have implemented configurators have done what I call Version 1.0 but need to be thinking about Version 2.0.  Version 2.0 offers companies an opportunity to distance themselves from the competition.

These best practices for offering and presenting configurable products and services via next-generation configurators will turn customers into committed, raving fans. That’s exciting!

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2010 Dave Gardner

Dave Gardner’s “Thank God It’s Monday” 07JUN10

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

An information technology department contacted me seeking assistance selecting a new configurator software package.

My response:  before we can talk about the technology, I first need to understand your business and your business requirements as well as the needs of your customers and channel partners.

• What is the immediate problem that needs to be solved and how can I help the client create a compelling vision for the future that is implementable?
• Are they looking to create a “me too” solution or a game-changing solution that solidifies their position as a market leader?
• Do they want to make an incremental improvement or do they have time to make a huge impression on their marketplace?

Getting an appropriate configurator system will ensure a company thrives. Conversely, selecting the wrong system will take a company to a deep dark place they will soon wish they had never entered.

Thought for the week:

“Courage is being scared to death – but saddling up anyway.” John Wayne

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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2010 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Self-Assessments: Configurable Products and Services

I have developed self-assessment tools for product manufacturers and service providers to look at their business execution for their customized offerings.

These tools can be used by individuals or in group meetings to understand the current state of the business.  They may identify gaps and could result in rather spirited debate if discussed at an executive staff meeting.

To access the PDF version of these self-assessments, please click the appropriate link below:

Configurable Product Self-Assessment

Configurable Service Self-Assessment

I would love to hear your reactions to these tools.  Please contact me via email at info (at) gardnerandassoc.com

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2010 Gardner & Associates Consulting