A day after I came back from my holidays , I got an sms from a friend that triggered me. The sms said; ‘Just spend last month abroad with the MD – he’s in trouble. Business has collapsed and IBP didn’t see it coming’.
My friend works for a company with brands everybody in the world knows and it just might be one of the businesses I described in it’s a complex business process stupid, a blog where I describe that many companies don’t get what capability is required to run IBP. If an MD from a company just doesn’t get it, you’re going to have a hard time!
At my farewells in a business I worked for, my MD thanked me for my efforts and told me; ‘I’m now a believer in IBP’. I said; ‘That did take you 6 months didn’t it?’ He agreed. This MD is now a believer because he sees the risks and opportunities in his business (his P&L) every month presented to him. After 6 months he got what would be possible with IBP. The MD in trouble is clearly not there yet.
In my spare time I’ve been working on a photo-sharing app as a side project. As I’m trying to get an on-line presence and some users for my photo-sharing app I realize there can be some similarities to online user acquisition and IBP. Online user acquisition goes roughly through the following steps:
- No Impressions: No views of my posts or ads in social media. In IBP terms, you don’t see opportunities and threats coming at all!
- Impressions: The amount of views my posts or ads are getting on-line, preferably from my target audience. In IBP terms, you see opportunities and threats coming, preferably the most impactful ones.
- Click through Rates: The percentage of clicks I get from the impressions I realized with my ad or post. In IBP terms, you see opportunities and threats coming and you’re able to mobilize your business to execute them.
- Conversion rate: The percentage of click throughs that actually converted in a sales or a new user. In IBP terms, the conversion rate of opportunities and threats you started to execute.
- Retention rate: The percentage of users or buyers that comes back after days, weeks or months to use or buy again. In IBP terms, continuously mitigating recurring threats and converting seasonal opportunities.
- Cost of acquisition: the cost associated buying a user or buyer from which the ROI can then be calculated. IBP is data hungry and needs monthly number crunching. In IBP terms this can be the cost of extra head count to do scenario planning, financial analysis, or to have an IBP manager!. Or in terms of new products the real cost of new product introduction. Including failures, production time lost, product write off, recalls and frustrated customers.
The MD in trouble clearly didn’t have enough impressions and didn’t see the risk to his P&L coming! But even when he gets impressions and sees things coming he needs to be able to mobilize a capable team that can execute, convert and retain the opportunities and mitigate the risks. This MD has still a lot of IBP work to do and maybe could have a look at how social acquisition works!
And just as a warning…this MD is now out of a job!