Burke McCarthy | How to Grow (Relative to Your Competitors) During Any Recession
Too often, says Burke McCarthy, companies focus on their product… the technology they’re offering, as well as the price. But prospects and customers don’t care about that.
No, they’re looking for value. And that exists only between their ears, not in your product. This recognition fundamentally changes how you approach sales and marketing. Burke reveals the best source to determine this value – it’s closer than you think – as well as how to implement it. And we also talk about…
- The two elements that must be in your customer engagement process
- Learning a common language with your prospect
- Using salespeople as “spies” – and market researchers
- How to identify advantages you’re not exploiting fully (we all have them)
- And more
Michael Webb: Hello, this is Michael Webb. Some people focus on reaching decision makers and selling value. Other people focus on gathering data, analyzing cause and effect, and applying statistics. Here, we focus on both to create wealth for customers, for our own companies and ourselves.
My name is Michael Webb. This is the Sales Process Excellence podcast. And I’m really excited today. My guest is a long time friend of mine and a marketing genius. His name is Burke McCarthy. Burke, welcome here.
Burke McCarthy: You’re too kind, Michael.
Michael Webb: So for my audience, can you give them like 30 or 45 seconds of what your background is?
Burke McCarthy: Well, I was with Eastman Kodak for 17 years. And I was a technical sales rep based in Manhattan for about eight of those years. And one of the key things I did as part of my job function … to justify the fact that our chemical prices were higher … we would work with professional labs on the E6 process. And we would basically run control strips and plot their process and how it was trending.
There were three dyes that we would track. We would run control strips through the process. We’d measure dye densities. We would plot it onto a control chart. Action parameters told us when we had to do something to get the process back on track. Control parameters, if exceeded, meant, “Don’t you dare run any film.”
So that’s where I developed an ability to look at process and systems, and how to apply that to create customer value. And I’ve done it many times.
Michael Webb: Wow. So you got to see it operating in the service that you were actually providing to the customers, right?
Burke McCarthy: Absolutely.
Michael Webb: But you’re an unusual fellow because you’ve transferred it not just in sales, of course, but also in marketing. And that is a real nebulous … I mean, I used to work in a small company and one of my directors of engineering said, “Yeah, marketing. It’s a black hole you pour money in.”
Burke McCarthy: Yes, well, I can tell you that it’s been a career struggle to deal with companies that don’t understand it. And I really don’t want to get too involved in that. It’s just that people, they don’t know what they don’t know about marketing. And let’s just leave it at that because that’s not the focus of what we’re talking about right now.
But it sure costs them a lot of money. Okay? And it’s not that hard to gather data to inform, especially your strategic decisions because it makes no sense to do the wrong things correctly. What you need to do is focus on how you deliver value to customers. And what they value when they make a purchasing decision.
Michael Webb: Which brings up one of the basic tools, I guess. I’ve learned so much from you about marketing and the tools that are used. But one in particular that you told me about and I use with almost every client … and I know you do too … is a tool called the Market Perceived Quality Profile.
And it’s in my book, Sales Process Excellence, in the appendix. But can you tell us where that came from?
Burke McCarthy: It came from a book called Managing Customer Value written by Brad Gale back when corporations were vying for the Malcolm Baldrige award.
Michael Webb: Yeah, okay.
Burke McCarthy: It’s from the ’80s. But what was cool about it is they showed an example using Frank Perdue. Now not everybody knows who he was but people on the east coast certainly do.
But basically, he looked at what the attributes people valued in buying poultry from the supermarket. It was totally a price game …I think $.69 a pound for chicken … and availability. And that was it. Either it was priced low and it was available.
But Perdue turned it into a value market by understanding people wanted more meat on the bone. People wanted no pin feathers to deal with when they bought a fresh chicken from the supermarket. He actually even added marigold flower petals to the feed so that their skin would appear tan compared against … Now anybody from a farm wouldn’t buy it but anybody who is not from a farm is going to choose that one.
And he learned all these things. He applied it and he took what was a price driven market and he turned it into a quality market.
Michael Webb: Because his product was differentiated according to the things he learned that his customers want.
Burke McCarthy: Yes. He went and actually asked them. He said, “What are the things that are most important?” We might call those attributes. And the way I might do this even at a trade show is you could ask. Make sure it’s the target first of all. The people that you’re really targeting. Don’t ask the wrong people these questions. But ask them how they ultimately make their decisions. And leave price to the side because you talk about that later.
The main things are: What are the most important things? Then if I took 100 points and I asked you to assign those points to those attributes. Let’s say there’s five attributes and maybe you assign 20 points to each one. But you might probably assign 30 to one of them.
The point is then you look at you and then you look at your competitor and you ask those people to assess, on a scale of one to 10, how you rank and then how your competitor ranks on delivering that attribute to the customer experience. And then you basically multiple across.
The beauty of this is it affords you strategic navigation at a very low price. In other words, it tells you that if you have a fundamental weakness as perceived by the market or your customers, this is what you should work on first to shore it up or improve it.
And by the same token, if you have some advantage and you’re not properly exploiting it then there’s a missed opportunity.
Michael Webb: Yeah. So let’s step back here. It is kind of a step-by-step sort of a process. There’s a template … and I’ll put that up on the blog post. We’ll put it up there so people can download it and reference the book and where to find the original description of this. But so there’s a template and at the top you write in the person you’re talking to. Like what type of company are they? What is their role in the company?
Burke McCarthy: Right. Yeah, at this point I’m just going to do a quick sidebar and talk about Rich Chernosky who wrote a great book on positioning. It’s really great advertising strategy.
Michael Webb: Okay. But hang on a minute. But that uses the information you would gather in the Market Perceived Quality Profile.
Burke McCarthy: That’s right.
Michael Webb: But I want to make sure that we’ve made it real simple that they understand what this thing is. Because I have clients where salespeople are asking these questions on a weekly basis and gathering that information. It’s incredibly valuable for them to be wanting to do that.
Burke McCarthy: Amen.
Michael Webb: So step one: Who are we talking to? The role that they play, the type of company that they are in. And then step two … down the left-hand side … what are the attributes that you value about a supplier like us? And just list them out.
It could be three things they put in there. It could be 10 things they put in. Now, go ahead.
Burke McCarthy: So when I worked with Cargill for example, they already had Six Sigma people in place who basically ascertained that what the customer values and the order in which they value it is cold, clean, correct and on time.
And by developing their abilities to deliver these attributes to the guy who’s in the back of the … name a big shopping store right now. Let’s call it Wegman’s. … and the guy who’s buying from Wegman’s, he wants it on Thursday, right in time for the weekend. He wants the order to be cold, so it doesn’t perish at all. He wants it to be accurate. He doesn’t want to have to call back and say that, “There’s a problem with the order. You sent me three chops. I only wanted two.” That kind of thing.
That same thing applies to McDonald’s, right? When you want to order within a certain of time. You want clean food anywhere you go in the world. You want the restaurant to be clean, the food to be quality … excuse me … they’re warm. And you have these expectations.
It’s when we see variance that you start to question the value of what you’re buying.
Michael Webb: Right. So let me ask a question because I had a client run into this and we had to figure out a way to deal with it. And I wonder if you’ve run into it before.
The client was instructed to interview multiple customers. And the first instinct the client had was … and these are sales people … “Well, wait a minute. If I go talk to these customers, they’re all going to say different things. So how are we going to make any sense out of that? I know. I’ll make a list and put my words in there so that they can tell me how important those things are to them.”
Burke McCarthy: Yeah, I wouldn’t recommend that.
Michael Webb: Yeah. I didn’t either.
Burke McCarthy: You have to use their language. Ultimately, that goes right to your communications and your messaging. If you’re not using words they use, you’re setting yourself up for trouble.
Michael Webb: So how do you deal with the issue where the client does use different words for the same thing? I mean the end customer that you’re interviewing.
Burke McCarthy: One of the only things you can do is kind of educate the sales force and other people not to use certain words. Like Xerox had a raster imaging processor that would go between a photo and then reproducing it electrostatically. It’s called a RIP.
The problem is they kept referring to that as the front end. And when you’re targeting the photo industry, you don’t call something that’s halfway down their process the front end of the process. Where you’re basically walking right in and you’re telling them, “I know nothing about your business.”
Michael Webb: By implication. Absolutely right.
Burke McCarthy: Absolutely. So that’s how it can play out in the market.
Michael Webb: So, when the client, they first use their own words. And they would have stuff like product line. And I asked them, “Well, so, what does product line mean?” “Well, completeness. Anything that they might want, we’ve got a product that will suit it.” Then someone else raised their hand and said, “Well, but we have a different application.” So was it application, was it completeness of product line, was it adequate for the purpose? They hadn’t really defined their terms.
So I made them go back and interview a bunch of customers and write down only what the customers said in that column. And then get together and sort of reconcile what these customers were talking about in order to come up with a common language to interpret what the customers were saying using the customer’s words as much as possible.
So have you had to do that too?
Burke McCarthy: Well, you’re reminding me of … I worked with a guy who actually did the research with Toro Lawn Mower when I was with Eastman Kodak. And he used language analysis. It was really fascinating to see how the more knowledgeable and involved someone was in a subject, how they used words that the next big cluster used some of those words. And then the huge cluster of people that took photos or used lawn mowers was …
Well, at any rate, what they found through their language analysis was that people were so angry. And meaning usually men, the target. Men who had to go cut the lawn on Saturday morning when they’d rather be playing golf. And when the lawn mower wouldn’t start, they would be enraged.
Michael Webb: Yeah. I’ve been there.
Burke McCarthy: And basically they measured that and they realized, “Holy crap.” So instead of putting their development funding into building a better engine than Briggs & Stratton or a better cutting deck than Snapper, they simply improved the starting mechanism and then they used the rest of the money to tell the world about it. And the world voted to the tune of almost $1 billion in sales so quickly it was absurd.
Michael Webb: Wow.
Burke McCarthy: Right. And these opportunities are out there. But you’re not going to do it without at least some modicum of a marketing mindset within your organization.
Michael Webb: So when my client did this, they were selling to the building trades and into construction projects where they’re building hospitals and data centers and stuff like that.
And what they quickly learned was that, “Wait a second. We have people who are building owners and then we have contractors. Oh, and there’s engineering firms. Of course, they’re architects and then there are independent reps who sell to the contractors.” So they have all these different channels. It’s a complex market.
And as they talked with these people, someone who is a building owner has a whole different set of things that were important to them than someone who worked in the maintenance department of that building. Or then the contractor who had to install this piece of equipment … it was a kind of HVAC equipment … and so they’re realizing all these different parties to sell to the channel have different value propositions. And the thing that struck them the most after looking over … It only took a couple of dozen of interviews. And the word technology was not used once by any one of these channel members.
And my client’s salespeople had been taught from the day they started with the company that their products were better because they had much better technology. And the customers didn’t care about it.
That was a very sort of stunning realization that they’ve been trying to tell customers about something that the customers didn’t care about.
Burke McCarthy: Well, there you go. A waste of breath. Right back to what I had said before. It makes no sense to do things right if you’re not doing the right things.
Michael Webb: Yes. And you have to figure out what those right things are.
Burke McCarthy: Absolutely.
Michael Webb: Then by asking your customers open-ended kinds of questions, you can do that.
So, you get the customer to fill out the first column. Things that they value. And then in the second column, you get them to take 100 points-
Burke McCarthy: No, I mean, you just explained for a second in your example. Here you have architects and then you have builders and so what you’re getting at is those are three different customer segments, so to speak. Right?
Michael Webb: Yeah, right.
Burke McCarthy: And so, when you look at those customer segments, each one of them is going to have a slightly different way that they perceive value. Now where the mistake often happens is when people don’t realize who the customer really is.
I worked, in fact, with another HVAC company. And it was a pretty fast-growing category of rooftop air conditioning systems, commercial. And the people who were doing the engineering thought that their customer was the next person down the line within their company. And sadly, they found out the fact that they were unable to deliver systems to a site to a contractor on a defined date in time, that lost them incredible amounts of market share.
Think about it. You’re the contractor. Right? I could use the competitor and know that it’s going to be delivered on Thursday. If I use you, I have to basically hire people and have them ready … including the crane … for three days instead of one.
Michael Webb: Because you don’t know exactly when it’s going to arrive.
Burke McCarthy: I don’t know if it’s going to come a day before, I don’t know it’s going to come a day after. But, you see, that type of thing, which is actually a true example, you saw an incredible decline in a growing category for this company versus their competitors who are all going in a positive left to right direction.
Michael Webb: Right. So the idea of taking 100 points or pennies and distributing those across those attributes that the customer thinks are important, the contractor might say, “On time delivery, the time I need it, I’m going to put 50 pounds on there.” Right? 50%.
Burke McCarthy: Right. Yeah, he’s actually the customer. And as a quick aside I will say that even the people that developed the turboprop … and they will go nameless because they were a client too … but they made this bet doing the turboprop because it used so much less fuel and the cabins were much more comfortable. But they didn’t think in terms of, “You know, your client is not the airline. Your client are the people that are willing to squash themselves into faster regional jets because they just don’t want to spend time on the airplane.” Big mistake. Right?
Michael Webb: Yeah.
Burke McCarthy: Think about the development funds that went into that. Yeah. And I’ve seen this so many times. I could write books about this but I’d probably get sued.
Michael Webb: Well, so you get the customer to tell you the attributes. You get the customer to weight them as important or rank them actually. And then the third step is, “On a scale of one to 10, how good are your perception of us on each one of these things?”
Burke McCarthy: Right.
Michael Webb: And then to the competitors. Now, when I was working with the client, it was hard just to get the salespeople to start by gathering just the characteristics that are important to us about a company like you. So I told them, “Just go do that. Nothing else.”
And then, the second round of interviews … once they had gathered that information and they learned to probe and be precise about what they actually meant … then the second round of interviews, “Okay now, do the same thing again. But this time add the weighting.” And they did that. And they learned a bunch from that because as they did that they were able to sort through and see the different channels, different customer segments, and see not only did they value different things, they weighted them differently. And then the third step was to rank our company.
So this is something that you can do incrementally and as it has turned out, the salespeople learn from their own experience that they liked doing this. It gave them something new to talk about that was respectful to the customer. They were able to get new information and get the customer to tell them something new.
It was a good way to propel their relationship because they weren’t feeling under the pressure of constantly trying to sell them and trying to make them do something that they didn’t necessarily want to do.
Burke McCarthy: As a great guy once told me. His name’s Dave Ellis. He once said that, “Sales is transactional and marketing is transformational.” I always like that line. It made a lot of sense.
Michael Webb: Well, and it’s transformational because it’s identifying these foundational things, the basic direction that we need to go.
Burke McCarthy: Yeah. And if you do it right, not only are you informing your product improvement decisions or service improvement decisions, you are also improving the way you talk to the market, whether it’s through your online communications, through your print advertising, and right down through your salespeople who are saying more relevant things to the person with the title with a similar problem that they’re interfacing with.
Michael Webb: Yes.
Burke McCarthy: No wasted breath. It’s all much more efficient, much more streamlined and, hopefully, much more productive for these companies that would adopt this.
Michael Webb: So now there’s another example you have that you told me about where you use this. And it was in the warehousing automation industry. Can you tell that story? And then we’ll wrap up.
Burke McCarthy: Sure. I should quickly say, I’m probably the poster boy for companies that think you have to have experience in the industry in order to do marketing. Because I went into the automated material handling industry with absolutely no experience in that industry. But what I saw I was quickly able to see what the problems were because of the experience I’ve had in other industries.
And I would say the two things that probably were the most impact on the company, which ended up being bought by a French company, in fact, because it was highly successful. One was the customer engagement process, whereby I used a lot of the tools that we’re talking about including MPQP. And I also did something called positioning, which I referenced earlier a book by Rich Chernosky.
By doing those two things, I felt that totally transformed this company and put them on a track where they were predictably pulling in system sales. And we actually got a $20 million order right in the middle of the 2009 financial meltdown.
So anybody doing strategy I would recommend, make sure you have a large private company in your portfolio of customers that is not impacted by Wall Street. Always a good thing to have.
Michael Webb: So give us a 60-second explanation of how the MPQP’s worked in that material handling company. And then how you translated that into positioning.
Burke McCarthy: Okay. Well, first of all what we’ve … without having the document in front of me. Well first of all, we looked at the target. Who is this person? In most cases, it was a man in a certain age bracket, usually somewhere from 32 to 54 to 60, with a title like Chief Operating Officer, something like that.
Michael Webb: This is the person responsible for the automated warehouse?
Burke McCarthy: That’s who we’re talking to. Right, yeah. They run an automated warehouse. Actually, they run a warehouse that could be at any one of three stages. What we realized at the very least they should have an automated shrink wrap palletizer. That’s probably the entry level where people can start to really consider automation.
Point is that by looking at that target, understanding their needs and writing it down on paper, understanding the benefits that we can give them, understanding what category we’re in. There are six elements ultimately. And one even included brand character. But by doing all of this, we basically had much more effective communication, much better sales results. And in fact, I will say with this one protein company at one point I remember being pressured to move away from them and go towards retail, which in fact would have turned out to be a disaster. And I didn’t do it because of Maslow’s hierarchy. People need food before they need fashion. Truly.
So I held my ground. We stayed with this company even though we hadn’t yet gotten an indication that we’re going to have a whole string of projects from them. We had done one project for them.
Michael Webb: You said protein. This is a meat packing company, right?
Burke McCarthy: Yeah, that’s right.
Michael Webb: Okay. So it’s a meat packing company has needs for material handling and you’re saying, “This is our market.”
Burke McCarthy: Right. So what we did is we operationalized their strategic intent. So, in other words, they’re delivering cold, clean, correct and on time. So the customer experienced better than their competitors. So that when they went in to negotiate with the buyer at any of the large grocery retailers, they had a better value to them.
And they realized that this was valued by the person making the purchasing decisions. And they achieved the highest margins in the industry, which allowed them to start building more of these box handling systems across the United States.
Michael Webb: So you were able to position the value of your material handling against those strategic things that they were aligning their company around?
Burke McCarthy: Yeah, we literally integrated with them. Hey, I took a salesperson, I said … who was brilliant, Tom Swovick … and basically, “Share your data with us. We’ll crunch it with you. We’ll help you develop your PowerPoints for the next meeting when you make presentations.” And by the time the second big project rolled around, they realized that all they made were ROI assumptions based on cost reduction. And what they had not anticipated is how the ROI would escalate because of the value they delivered and the fact that people flocked to get it.
It was a real revelation. One of the greatest. Getting that project in the midst of that 2008 was really an incredible experience.
Michael Webb: Because you made something that was literally invisible, you made it visible by defining the terms and defining what was valuable, and then aligning to show that you’re able to create those values and it translates to financial success.
Burke McCarthy: Big time.
Michael Webb: That’s a great story.
Burke McCarthy: They ordered three more systems.
Michael Webb: And so your company was growing in the midst of this recession, right?
Burke McCarthy: Yeah.
Michael Webb: Which led to the purchase, the acquisition by the European parent. So a bunch of happy stories.
Burke McCarthy: Yeah, it transformed the company. And what I like about it is going back to when I was a technical sales rep in New York City and I looked at process, there was something I did an incredibly … I shouldn’t say I. I don’t like to do that. It was a team. But we also really stunted Fuji Chrome as well. But that’s another story for another time. But by looking at a systems approach and then continuing to apply it throughout my career, I’ve just enjoyed a lot of success and a lot of variety. And what a great career I’ve enjoyed.
Michael Webb: That’s great. That’s a super story.
Burke McCarthy: Really. People call me. I don’t have to promote. I get calls.
Michael Webb: And you and I’ve worked together on projects and I’m looking forward to doing that again. And like I said, I’ve learned so much from you. And there’s so many other topics … tools and things … I would love to do another interview focused on a different tool at some point in the future if you’re open to that.
Burke McCarthy: Great. Love to.
Michael Webb: Okay. So when people listen to this, they may want to know how to get in touch with you or how to reach out to you. How do they do that?
Burke McCarthy: Well, I’m on LinkedIn. My contact information is right there. So just send …
Michael Webb: So spell it out. Burke McCarthy, right?
Burke McCarthy: Yes. B-u-r-k-e, it’s an unusual name. McCarthy … M-c capital C-a-r-t-h-y. And I’m based in Toronto. And … go ahead.
Michael Webb: Good. So I will put a link to your LinkedIn profile in the blog post. And I’ll also put a template of this Market Perceived Quality Profile from Bradley Gale’s book.
Burke McCarthy: Great.
Michael Webb: Yeah, this would make a nice little package. And definitely, anybody that uses this is going to get some eye-opening results. Highly recommend it.
So thank you, Burke.
Burke McCarthy: Happy.
Michael Webb: Thank you very much. And we’ll be talking again soon.
Burke McCarthy: Thank you, Mike.