Building mafia offers for smbs

Mafia offers

October 23, 2013 – Enterprise Lithuania Conference

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© 2013 Science of Business, Inc

Why do we improve?

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2

Dr Lisa

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Why Improve? To create more

LEVERAGE
6 week lead-time
Sales 1.0 mm
To Increase Sales
-TVCs -.2 mm
================
T
.8 mm
With the SAME
-OE
-.5 mm
================ people and resources!
P
.3 mm
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Get More Jobs Done Faster
and Sell to Capacity!
6 week lead-time
Sales 1.0 mm
-TVCs -.2 mm
================
T
.8 mm
-OE
-.5 mm
================
P
.3 mm

3 week lead-time
Sales 2.0 mm
-TVCs -.4 mm
================
T
1.6 mm
-OE
-.5 mm
================
P
1 .1 mm

That’s a PROFIT increase of $800,000!
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Theory of Constraints Results

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Theory of Constraints Results

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What are the effects of your
improvements if you..

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Assessment – Market Constraint?
• Do you have a market constraint?
– If I could increase your sales tomorrow by 20%
could you handle the increase while:
• Being 100% on-time to your first commitment
• Without going into firefighting mode and continuous
chaos
• And, at a competitive lead-time

• If the answer is yes, you have a …

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Market or Sales Constraint
• If you don’t have enough sales and could
handle more and you have a good
product/service, the problem could be any
one of the following:
–
–
–
–
–

Your offer
How you present your offer
Your market
Traffic / Enough Leads
Conversion

We MUST start with the offer!
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Why should I buy from you?

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Why buy from you?
Pause the video and take 1 minute to have everyone discuss at their table.
At the end of the minute collect some responses.

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The Generic List
What Everyone Says
• We have outstanding quality and it’s better than
the competition.
• We have a great reputation.
• We get good results for our customers.
• We have very knowledgeable, great employees
with low turnover.
• We’re very responsive.
• We’re very innovative and can help with …
• You can trust us.
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So why not just choose based on
price? Or just delay the purchase?

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A Mafia Offer is where we start
for a Market / Sales Constraint
• “A mafia offer is an offer that is so good, that
your customers can’t refuse it and your
competition can't or won't offer the same.”
Dr Lisa Lang
• It is different from a competitive advantage,
unique selling proposition, or a value
proposition …
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Example
In 2009 Hyundai, due to its Assurance
Program (its Mafia Offer), is
enjoying sales for the year that are up
about 4.9 percent over the same period
in 2008. That compared with about a 40
percent drop for car sales overall.
• And this wasn’t even a great Mafia
Offer because it was copied fairly
quickly.
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Hyundai 2011 offer

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Example
Rollover minutes by AT&T cellular
• Was difficult to follow and still no competitor
has matched since 2003
• But then they started to weasel:
– …this plan has the usual gaggle of restrictions.
– “Rollover Minutes is only on local calling plans,
and you must sign up for at least 600 peak and
3,000 off-peak minutes for $39.99 per month with
a $36 activation fee and a $150 termination fee.
Long distance is included, but roaming costs 79
cents per minute.”*
* These may or may not be AT&T current terms and conditions.
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A Mafia Offer is NOT / does NOT …
•
•
•
•
•

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based on an innovation
require new products or new markets
based on price
a cutesy tag line
a list of strengths, a cliché, subjective,
or offered by the competition


Mafia Offer Development Guidelines
• To develop a mafia offer you need to
consider 3 things.
– Your capabilities what they are and
what they could be compared to the
competition.
– How your industries supplies your
products/services.
– The impact your industry’s capabilities
and how you supply has on your
customers.
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Mafia Offer Example
• Custom Label Printer
1. Your capabilities what they are and what
they could be compared to the
competition.
2. How your industries supplies your
products/services.
3. The impact your industry’s capabilities
and how you supply has on your
customers.
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Is it a Mafia Offer?
• Is it un-refusable to the customer?
• Can the competition match it?
–What’s their lead-time?
–What’s their DDP?

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What did it take?
• Reducing lead-times from 2 weeks to
2 days while sales remained constant.
• How was that possible?

They implemented what you read in
the book The Goal
 www.VelocitySchedulingSystem.com for manufacturers
 www.ProjectVelocitySystem.com for project based or service
companies
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What else did it take?
• They had to challenge
how they
fundamentally did
business.
– Why does the
price/quantity curve
exist?

They had to rethink their costs and financials …
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So not only can’t the competition
match the offer – they won’t.

26 © 2011 Science of Business, Inc
26 © 2013 Science of Business, Inc

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The results?
• The printer’s profits went from break
even to 20% return on sales within 3
months.
• Sales and profits have since doubled.
• And profits are now 25% of sales.
• In 2009, during the tough economy,
they continued to grow but at a
slightly slower rate.
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Mafia Offer Benefits
• Increases sales – answers the question
“Why should I buy from you?”
• Guides the strategy and tactics for your
entire company.
• Forces operational improvement in order
to deliver the offer. And gives you a
reason to do it!
• Or, helps you to sell the capacity you’ve
uncovered through your improvements.
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Mafia Offers Benefits
• Changes the culture.
• Can recession-proof your company.
• Can help you recover from a cash
constraint.
• The combination of operational
improvements and the offer provide
huge bottom-line results (LEVERAGE).

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Summary
• If you don’t sell the capacity you’ve
uncovered through your
improvements – you’ve
accomplished NOTHING!
• Focus your improvements on
creating a competitive advantage.
• Make a Mafia Offer to sell your
competitive advantage.
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More in on Mafia Offers?
• Get Dr Lisa’s ebook from Chapter 22 of
the Theory of Constraints Handbook,
Mafia Offers: Dealing with a Market
Constraint.
• Available on Amazon or get the PDF
version here:
http://www.scienceofbusiness.com/by-drlisa-lang/mafia-offers-ebook/
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Free TOC Newsletter
• Signup at:
http://www.scienceofbusiness.com/subscribe/

• Some of the topics covered:
•How to FOCUS and Get more Projects or
More Jobs DONE
•Mafia Offers and the TOC approach to
Marketing
•TOC Pricing
•TOC Measurements
•Drum Buffer Rope Scheduling
•The TOC Thinking Processes
•TOC Leadership

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•TOC Supply Chain and Replenishment
•TOC Throughput Accounting
•TOC Viable Vision and Strategy
•Our approach to Quick Quoting using
Theory of Constraints
•Announcements about TOC events
•And much more …

Results with a Mafia Offer:
• “We have increased our sales by 50% within 9 months of going
out with our offer.” Lane G., Owner
• “We have increased our sales 80% and have been able to move
the constraint from the market back into the operations.”
Alessandro B., VP
• “We landed a new $1 million account within 3 months of our Mafia
Offer Boot Camp. Now that’s an offer!” Paul C., VP

• “We are a current customer of Dr. Lisa and I must say that the
mafia offer that she gave us literally saved my business and
helped us grow sales almost 100% since we started (1 year).”
Grady C., Owner
• “In August ‘07 we had over a 7X increase in premium collet dollars
in just 8 months after going out with our offer.” Richard P., Owner
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“Dr Lisa” Lang
•

•

“Dr. Lisa” is a renown Theory of Constraints expert and is the foremost
expert in the world for applying TOC to marketing. Dr. Lisa is regularly
sought out for her expertise on developing market offers that increase sales.
She has been named a “2012 Trendsetter” in the USA Today and a
“Manufacturing Champion” in Newsweek for her Velocity Scheduling
System program and her work helping highly custom job shops and
machine shops to become more productive and more globally competitive.
She has appeared in CNBC, CBS, The Wall Street Journal, and Yahoo
Finance to name a few.
As the President of Science of Business, she invented the Mafia Offer Boot
Camp developing over 100 Mafia Offers for fortune 100 companies and other
organizations around the globe. Dr. Lisa's Mafia Offers: Dealing with a
Market Constraint chapter in the Theory of Constraints Handbook reached
the #1 spot on the Amazon best seller list, as did Marketing Miracles a book
co-written with marketing legend Dan Kennedy. Dr. Lisa worked with Dr
Goldratt, serving as the Global Marketing Director for Goldratt
Consulting. She has a PhD in Engineering and is a TOCICO certified expert.
She is currently Chairman of the Board for the TOCICO Board of Directors.
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Building mafia offers for smbs

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