Introduction

This is a method to improve efficiency - I have mainly heard about this in a business scenario, but they do say it could be applied in your personal life with friends etc.

Summary

Well established and can be applied to business and personal life.
It is probable that approximately 20% of your customers will be your best customers, they may be repeat customers, they generate revenue for you - but the key thing is - they and not much work.
Whereas 80% of your customers may bring in revenue but their demands are higher, they require more resources (your precious time dealing with queries, deals, bartering, chasing etc.) therefore their revenue is harder fought for and is not as cost effective.
This will be more apparent if you are selling to distributers/outlets etc as opposed to individual members of the public, however you may find that there may be a large proportion who ask more questions, create more problems etc.
If it’s possible and if their traits persists, then seriously consider getting rid (if you can afford it).
Your efforts and resource are best served with the 20% and then, within that 20% you can apply the 80/20 rule again, focusing in on your very best customers with preferential treatment.

This rule can be applied in all lines of the business, for example marketing efforts, assets, software, staff etc.

Be Brutal

It could be a difficult decision to make, as you need customers or clients.
What you need to bear in mind, as that your time and resource is limited, and time wasted on clients or customers demanding high levels of attention eat into this resource.
Your time and effort could be best served on your top 20 clients / customers or creating new leads, marketing efforts or other aspects of your business.

Introduction

1. A useful concept and widely used in slightly different formats

2. It can be applied to any product or service

Summary in 3 Points:

1. Offer a basic no frills option - could even be a free incentive

2. Offer the middle 'JUST RIGHT' option, not basic, but not probably including unnecessary features

3. Offer a top spec model or service

Conclusions

• It's well proven that the majority of people go for the middle option, they don't necessarily want the most basic, but neither do they want to pay for features or add on's that they may never use.

• The point is - focus your marketing efforts on the middle 'Just Right' option.

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This is a well established principle. When designing your product or service aim for 3 possible options, a basic option, a middle option and a high end option.
The majority of customers will opt for the middle ‘Just Right’ option.
They may not want to go for the basic option if they can have middle option for a small extra fee.
Likewise they may not feel the need for highest spec option, this may include features that they won't need or use.
The middle option therefore needs to attract more of your marketing resource.

You could look at all sorts of areas for examples:
Broadband - different level of broadband speed, and then you get into the options, Sky Movies, Sports, Netflx etc.
Mobile phones - all sorts of different package deals after you have decided on a phone.
Even Supermarkets can have their basic entry packaged products, regular or premium.
So examples of offering the customer a range of options are vast, but the suppliers will have their own version of the 'Just Right' middle of the road option that they'll focus their marketing efforts on.

Introduction

1. Similar to the 80 / 20 Principle in some respects, but takes it further and asks questions of your current business set-up and if it is fit to cater for your now selected preferential clients.

Summary in 3 Points:

1. Weed out customers who drain your resources for little return.

2. Focus on the 'healthy' customers and again filter and refocus

3. Asses your systems and structure to suit

Conclusions

• The Pumpkin Plan outlines broadly an approach to nurture your best customers and clients, focus on them, so much so that later review your current systems, organisational chart, job roles etc. Is your current structure suited to these customers and clients?

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The 3 Questions - (taken from the pumpkin plan)

1. Does this decision better serve our top clients?

2. Does this decision improve or maintain our area of innovation, or in other words, the unique element that distinguishes us from our competitors?

3. Does this decision grow or maintain our profitability?

By asking these questions your employees will be empowered to make decisions that align with your companies best interests. If you can answer yes to all 3 questions then you know that you are on the right track.

The Pumpkin plan has 7 stages, which basically takes it’s idea from someone who grew giant pumpkins

Starts obviously with the right seeds, bins off the weaker plants (weaker clients/customers),

Nurture your best clients, look after, special treatment for the best, follow this treatment on to your next best (It’s kind of 80/20),

Give yourself sometime on a regular basis to review your businesses progress, create an organisational chart, look at this with a view of what would work best for your main clients, are roles missing? do you have redundant positions?

Use the 3 questions. Basically gear everything up around your best customers, design your work around them and bin off weaker clients who may take up an unnecessary amount of resource.

Introduction

1. It makes sense to question everything

2. For a Product - why do we need it, what should it achieve, what's the starting and end points?

Summary in 3 Points:

1. If you are looking at a product or a service, unless you think it is perfect then asking why helps drill down to the basics

2. Question why it is so, is there a better way of delivering the finished outcome, or better still could the outcome be improved upon?

3. For products you can question their design, their materials, their ease of use, the aesthetics

Conclusions

• Ask questions to drill down

• If in employment, there may be established ways to do things - it doesn't mean that there is not a more efficient way of producing the end result

• It's just basic questioning towards continual improvement and efficiencies

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This is a pretty useful thing to apply, pretty sure Toyota use this as well as their ‘Lean’ continual improvement ethos.

But basically ask Why, an example, someone says their goal is to be a millionaire. Why is this?
If you drill down by asking why, it’s probably going to come down to something like not having to worry about paying for their bills, keeping a decent roof above them and looking after themselves and family.

It’s just a way of trying to get to the root cause of an issue that can be addressed.

It’s just useful to question everything, why is a product designed the way it is? - what is the underlying problem that this product solves and could this be addressed in a simpler, better way?

It's a few years ago now but for example, Dyson completely changed the way hoovers work and created bagless hoovers which had a different way at looking at the motor to create suction. Back in their day they were the 'top line' in hoovers and very popular.

Introduction

1. It's doubtful problems will go away - nip in the bud!

2. Try and plan - foresee potential issues

3. Company culture with every Hire, Fire & Promotion

Summary in 3 Points:

1. See body

Conclusions

• Don't ignore problems or complaints - they will probably only escalate and take up even more resource

• Try and foresee potential problems and build in systems or outline a process to deal with such a scenario

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Ostrich Effect

Guilty of this in the past, don’t ignore problems it’s doubtful that they will magically disappear.

Taking the decision may be difficult and it may be difficult to acknowledge that an error of judgement or a decision has turned sour, but frustrating as it may be, the problem needs to be addressed.

To avoid this cycle, try and be as proactive to pre-empt any potential problems, play out potential scenarios to accept the risk posed by your decisions.

And remember if a decision goes awry, you need to nip it in the bud before it into spirals into a significant problem causing an undue multiplier effect, additional resource and cost to resolve.

3 Bar Framework

In the world of business where every decision can alter the future, there’s a fundamental principle that top leaders adhere to.

Uphold the companies culture with every hire, fire and promotion

A robust company culture is the backbone of a successful enterprise, it’s a delicate balance, but think of it like a bad apple.
The 3 bars principle can be applied to other areas of the business, not just staff and culture.