Lesson 4: An offer the shop can't refuse

The unrefusable offer

In Goldratt’s novel It’s Not Luck, a struggling company stops trying to sell harder and starts asking a different question: what is the customer’s real problem, the one he can’t solve himself? If you can solve it, using a capability your competitors don’t have, you can make an offer so good the customer can’t refuse it, and so hard to copy that competitors can’t quickly match it. Goldratt called it a “mafia offer”: not a threat, an offer nobody in their right mind refuses.

Its ingredients:

Understand the customer’s problem better than the customer does: its cause and effect, not just its symptoms.
Build the offer on a capability you have and competitors don’t.
Make it win-win: the customer gains much more than it costs you.
Make it low-risk for the customer.

Kestrel now has all four. The shopkeeper’s problem is money stuck in stock and shelf space wasted on items that don’t sell. The capability is fast, frequent replenishment. The gain is a higher return on money. The risk can be removed with a take-back promise.

The visit

Two weeks later. Sunil, a salesperson employed by Kestrel’s distributor, walks into Farida’s shop. Ruth stands near the door.

Sunil: “Madam, today I haven’t come to sell you a product.”

Farida: “That’s new.”

Sunil: “Kestrel has decided to work in a completely different way. From now on I’ll visit you on a fixed day, every Tuesday. Since I come every week, you don’t need to keep more than fifteen days’ stock of any item.”

Farida: “And the money I save?”

Sunil: “Spread it over more items. Keep the exhaust fans, the panel lights, the premium range, the things your customers ask for and go across the road to buy. Same money, more choice on your shelf.”

Farida: “And if your new items sit there?”

Sunil: “Display them properly and try to sell them. If an item you’ve never kept before stays unsold for one or two months, the distributor replaces it with a running item, as long as it’s in saleable condition.”

Farida: “Every company says Tuesday. Then they come when the target is short.”

Sunil: “Then judge us by Tuesdays. If I miss one, you’ll know the offer isn’t real.”

Look at what the offer does and doesn’t contain. No extra margin. No scheme. No minimum quantity. It is built entirely on the retailer’s two constraints, space and money, and on one capability Kestrel controls, the speed of the shelf.

Pause and think: Farida’s last objection, “they come when the target is short”, is the most important one. Why?

It means she doesn’t like Sunil personally and would prefer another salesperson on her beat
It is about price
Her gain depends on reliable visits; otherwise she must hold a month’s stock again

Fifteen days of stock is safe only if the replenishment really comes every week. Reliability isn’t a courtesy here; it is the offer. Trust is earned one Tuesday at a time.

It can’t be left to the channel

Anil: “So we tell the distributors about the new offer, and let them run it.”

Ruth: “Their salespeople visit shops for twenty companies. Each one pushes whatever the month-end scheme says. Who will make your offer, the same way, every Tuesday, in twenty thousand shops?”

Secondary sales, from the distributor to the shop, can’t reach this standard if the company leaves them entirely to its channel partners. The company must be involved. What it takes:

Enough exclusive distributor salespeople to cover the whole territory, each with a fixed beat: which shops, which day.
Initial training of those salespeople and of the distributors.
Training of the company’s own sales officers, area managers and regional managers in: how to present the offer; how to handle the retailer’s reservations; how to review the secondary sales process; and the products themselves.
Continuous guidance, so that distributors don’t slide back to the old way when month-end comes.

Train the trainer, in the market

A classroom can explain the offer. It can’t teach a salesperson how to answer Farida. That is learnt in her shop. So the roll-out is a cascade of on-the-job training, four weeks at a time:

One regional manager, one area manager and one sales officer get four continuous weeks of on-the-job inputs together.
The regional manager then spends at least three days a week with another sales officer for four weeks, in the same branch; the area manager trains another sales officer the same way; and so on.
Every trained sales officer spends four continuous weeks with each distributor salesperson in the market.
Each distributor spends four continuous weeks with his first salesperson in the market.
Then the regional manager takes the next branch, and the cycle repeats.

Why does the cascade insist on four continuous weeks with each salesperson, rather than a two-day workshop for everyone?

The skill is handling objections in real shops, and four visits show the offer working
Because workshops are expensive, and four weeks in the field costs the company nothing extra in travel
Because the managers have free time

Four weeks is four visits to every shop on the beat: enough for the shopkeeper to see the Tuesdays happen, and for the salesperson to hear every objection with a trainer beside him. A workshop spreads the change thin and fast; the cascade grows it slower at first, but each step is solid.

Check your understanding

Answer all five. Get four right to complete the lesson.

1. An unrefusable offer is built on…

The deepest discount in the market, for a limited period
The customer’s real problem and a capability competitors don’t have
A bigger advertising budget
Exclusive contracts

Win-win, low-risk and hard to copy.

2. The retailer offer asks Farida to hold no more than…

A month’s stock
Three months’ stock
Whatever earns the scheme
Fifteen days’ stock of any item

Possible only because the visit is weekly and fixed.

3. What removes the risk of keeping new items?

Replacing a new item unsold for one to two months, if saleable
A higher margin on new items for the first three months after launch
A free display stand
A credit extension

The shop can widen its range without fear of dead stock.

4. Why can’t secondary sales be left entirely to channel partners?

Distributors are dishonest
It is cheaper for the company to let distributors pay for the salespeople who visit the shops
Their salespeople serve many companies; the offer needs a fixed, trained beat
Shops won’t talk to distributors

The company must provide the people, training and guidance.

5. In the train-the-trainer cascade, the training happens…

In a central classroom, so every salesperson hears the same message
In the market, four continuous weeks with each salesperson
Online
Only for managers

The skill is learnt in front of real shopkeepers.