If you’re in the
consulting world or even just in business making products, did you ever wonder
why some companies seem to get more than their fair share of business? We seem to always be looking for ways to get
more business and make more profit for our companies. What if there was a method for assuring that
your business was able to bring in more work than you ever have in the past? Would that be of interest to you? Success in your business is not a matter of
beating the price or service of your competitors, but what is the key? This posting is all about something we call
in the TOC world a mafia offer. No, not going out and hiring gangsters to get
you more business….not that kind of mafia.
A mafia offer is all about increasing the value of your product or
service….an offer that your customers simply can’t refuse. Sound interesting?
A mafia offer is an
offer that is not difficult to construct and if it’s done correctly you could
reasonably expect an 80% offer closing rate.
So let’s talk about the basics of mafia offers and how the Theory of Constraints
enters this discussion. Once again it
was Dr. Goldratt who developed the mafia offer back in the 90’s.
Many of my blog postings
have been about TOC and I’ve said many times that there is always an internal
or external constraint that is limiting your system’s performance when compared
to your stated goal. I’ve told you that
the key to profitability is not through how much money you can save, but rather
how much you can make. One of the keys
to the mafia offer is creating a proposal that seeks to maximize your client’s
profits by identifying and focusing on your client’s system constraint. The mafia offer is intended to remove or
diminish the effects of the system constraint and demonstrate more value for
your products or services…..and for sure much more value than your competitors.
The presentation you
make to potential clients is really the key to the mafia order, but you must
know your industry inside and out. You
must understand your own capabilities and those of your competitors. My advice is to follow a very simple
presentation format like the following:
1.
Using a very simple
Power Point presentation, I recommend that you start with an overview of
problems within the industry and not the typical company background that most
presentations include. They are very
boring! Clients want to know right away
what you can do for them. Show them the
negatives from your industry and watch to see if heads are bobbing in
agreement. Start with things like typical
lead times, minimum order quantities, high inventories, on-time deliveries,
etc. that demonstrate how the industry’s current practices are hurting their
business. Stop every once in a while and
ask them if they are feeling these negatives in their business. What you’re doing here is getting them to
agree on the problem.
2.
The next step is to
get the potential customer to agree on the general direction of the solution. Start with something like, “So how do we fix
these problems?” We are attempting to
describe what life would be like if we had solutions to these problems in
place. In this step we are developing,
with the client, what the basic criteria for the solutions would look
like. When this is complete, we present
an overview of our offer first and then in a bit more detail for each of the
solution criteria. Keep it very simple,
but it’s important to provide to explain the results they will experience. When you’ve finished this part, ask the
potential client if they believe the offer you have presented, the solutions,
will solve the problems they are facing every day. You’re looking for agreement here.
3.
The next step is to
draw a comparison between your company and the competitors…a contrast if you will. Here is where you offer proof that your
solution will work by presenting relevant case studies from clients you’ve
already served and delivered for. This
is the central core of your mafia offer.
One key point is the advantages that you are presenting must clearly be
significantly greater than the cost of your product or service.
4.
Finally it’s time to
close the deal, but keep this simple too.
I recommend that you repeat your offer with specifics like, “Our offer
will slash your lead times by “x” days or weeks, improve your cash flow, reduce
your inventory by “x” % while eliminating stock-outs, etc. or whatever you
truly believe will happen if they accept your offer. Be bold and ask the potential client what
they think? If you get a positive
response, you’re most probably looking at a contract, so ask them what the next
steps are and then let them tell you what they are.
The key to remember is
that a mafia order will be something that your competition can’t, or is
unwilling to, match at least in the short term.
Bob Sproull
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