The Email Newsletter

A pillar of our marketing strategy for the past 7 years has been our humble but regular email newsletter - The Coffee Pot.  In the past few months we have been reviewing progress and the effectiveness of our email campaign as we have quite a body of emails now floating across the web each month.

 

In August we conducted a respondent survey which gave qualitative feedback on the types of articles people like to read, what they don't like, what they think of font sizes etc. 

 

We've been incorporating the feedback into the latter issues and getting some interesting results.  We have always enjoyed the speed and effectiveness of email campaigns.

 

Tracking the quantitative aspects of the emails ie bounce rate, opening rate, links clicked we have traditionally used the same software as our general website statistics.  This was good at giving us raw numbers of people whom landed on our site from the newsletter.

 

This week we started to use Campaign Monitor, a dedicated service for email campaigns.  I had this on the "To-do" list for quite a few months and I wish I had done it 7 years ago.

 

The reporting has brought our effectiveness under the spotlight.  It is so much easier having the response rates "at a glance" on just one report page.  

 

Can't wait to send the next newsletter and track our improvements and add to our pillar of strength.

 

 

 

 

Hard work verses Talent

Last night I attended a school presentation night and heard the Head of School quote Abraham Lincoln as saying "Hard work beats talent when talent doesn't work".  His message to the graduating 12 year old scholars was that they have innate talents as youngsters but their success is now needing the input of hard work.

 

This got me thinking about the greatest challenge facing the Australian small business sector in 2008.  In my opinion it will be maximising productivity from existing constrained resources.  Our corporate talents which have carried us through the past few years werecarry overs from entry of timing and market opportunities.  The move to coffee machine automation and the Australian resources boom have both conspired to propel our business forward. So far.

 

2008 will be a challenge year.  Competition is certainly increasing.  Inflation is certainly becoming a factor in our market place.  Rising corporate financing rates will mean our corporate clients will be under pressure to contain cost as their own costs of business increase.  Gilkatho will be needing to continue developing new services, new products and delivering services at the same if not lower costs.

 

We certainly have the corporate talent.  The next years looks like our opportunity to apply the elbow grease even thicker.

 

 

New Product Development

At the moment Gilkatho is in the middle of developing three new products.  Over the past 8 years we have distributed products from suppliers whom have done the product development and the market positioning.  With these new products we are developing the taste, the market position and the roll out.  Exciting times which also draws on our many skills.

 

The first product, CAFIN8, is now available on our shelves and is being rolled out to customer sites.  It is a new mixture of soluble products which are suitable for use in vending and dispensing machines.  The range includes hot chocolate, cappuccino topping and a Colombian gourmet coffee.

 

The next two are currently in the taste profile stage.  We have already signed off on the branding and packaging having completed the market focus group in October.  In house feedback on the blends is encouraging - we love them.  I did some "blind" testing yesterday with a customer and they preferred a more traditional blend.  We have some more product being produced this Friday and we'll adjust our recipe based on this feedback.

 

I'm looking forward to these latest products which we are planning to launch in February as then we will start actually selling them....the most prolific customers so far are in our in-house drinkers whom don't pay!

Industry Membership

The "coffee industry" is extremely fragmented with over 300 coffee roasters in Australia servicing over 11,000 food service outlets.  Backing this up are the many service providers installing machines, attending to breakdowns, providing training plus ancillary services.

 

We have therefore been interested in developing industry contacts through associations.  While we are in daily contact with many like-minded organisations we also need to develop our network with industry companies whom we may not generally be in contact with.

 

Thus Gilkatho decided to join the Australian Coffee Traders Association.  ACTA have been representing the Australian coffee industry since 1940 – assisting and improving the standard, promotion and image of coffee by providing a platform for networking and furthering education.

 

The organisation was involved  in the successful negotiations of the exclusion of coffee from GST, instrumental in the reduction of duties on the importation of coffee and providing experienced judges for Royal Agricultural Society's coffee awards.

 

We are looking forward to the flow of industry knowledge.
 

Google helps coffee travels

It takes a while for new applications to make their way into mainstream business. The Google Earth and Google Maps applications are natural fits for geo-industry like property development, mining and planning. I was pleasantly surprised how much easier Google Maps made planning my recent Italian trip.

Finding the right hotel in the right location is critical in a large city like Milan. I was able to plot onto the map, my arrival station from the airport, the main metro lines and the Central Station. It was then apparent that there was an intersection at Cadorna Station around which all of our travel would take place.

Google Maps then provided a search of hotels from this point. A good night's sleep is important on trips so I felt the need to do more work on hotel selection. I added suitable hotels from the main hotel sites ie tripadvisor.com, worif.com and a few others.

With the suitable hotels on the map I was then able to better understand the tradeoffs between location and prices. The further from the station and key facilities, the price went down. More transit time each day.

In the end I settled on the Hotel King which was within walking distance of Cadorna station, the city centre and, most importantly, gave a good taste of Milanese life.

The Way Ahead

Election 07 has arrived beckoning 13 million Australians to the polls today. With so many people thinking about the future government it has inconveniently fallen in the middle of my time thinking about future micro-economic development at Gilkatho in 2008.

The Australian economy is at full production, extra labour is virtually zero and inflation likely to increase in the next year. The management challenge is to still service the economic growth given these constraints.

Price rises are going to be inevitable over the next year. Unfortunately a higher inflation economy rewards poor management, allowing mistakes and poor decisions to be recovered by price rises. We need to make suppliers fully justify any price increase.

The first step of business expansion is to add more labour to the business mix. This is not going to be an option over the next year. Business growth is going to come by achieving more with the same headcount. Gilkatho will need to use technology to allow each person to be more productive. Technology need not just be "computers". We can also use the latest research to make sure our employees perform and interact with the latest approach to business. We plan to subsidise the further study of one third of our fulltime staff in 2008.

Regardless of which party finds itself on the government benches on Monday the facts will remain 2008 will be a tough year not for the lack of business opportunity but for the lack of extra people to do the work.

Racing Track or Rainforest

Having spent the last couple of days listening to the strategy development of various companies my mind turned to how our brains do see the patterns of our competitive landscape.

 

Management development programs often use words like "structured approach", "decision framework" and "situation analysis".  All implying that business is a structured finite environment, like a race track.  We know where it is, it is clearly defined and we just need to get around it faster than our competitors.  Record times come when we are pushed by our competitors.

 

For a moment, consider that the business challenges today are similar to a rainforest.  The environment is ever changing and those changes affect each other.  We already talk about the competitive "environment", the industry "landscape" and the "jungle" of options. When one species survives, others may dwindle, a change in an environmental factor (such as global warmer or high employment) sends one specie to extinction while another specie thrives.  Too little rain kills off the protected but others grow taller.

 

How much of today's challenges can we think of in the context of some of our most pristine yet complex environments.

 

    A competitor introduces a new product which spreads though your customers like a vine, strangling your opportunities.  Some adapt to it, others move to a new tree or perhaps cut the vine off at the base.

 

    Lightening strikes the forest canopy, allowing sunlight to stream to the forest floor.  Perhaps a government changes from pro-business to pro-worker.  Some species will be threatened, some will emerge from the darkness, some may go underground and the truly hardy species will evolve, adapt to the new environment and survive.

 

Management development programs need to develop the mind to identify patterns.  These patterns at first might just be a "feeling" needing more work to identify the source of the emotional response. 

 

Management today is not just a series of steps, it is more likely to reward the management species that has an affinity for their environment.  Our business opportunities with emerging Chindia, labour shortages and increasingly complex technology are more forest than flat bitumen racetrack.

Hotel Review Websites

In my recent travels to China, Europe and now Sydney I've been making use of a hotel review website to assist in the selection of a suitable hotel.  Having the right hotel can make or break a trip.

 

The website I've found most credible is tripadvisor.com .  The site has a significant volume of reviews. Each of the hotels I considered had at least 3-4 reviews from fellow travellers.

 

When reading reviews you have to consider that they are opinions.  Unhappy travellers are more likely to take their time to post their thoughts.  When I did choose a hotel there was usually at least 1 negative review.  It is the negative reviews that prepare you for what might happen. 

 

The greatest advantage of the "dis-interested third party" review system is that the reviewer has nothing to lose.  The review is an opinion of a person who had an experience on one day.

 

These advisor website will save the traveller time and money.  They usually also have links off to travel sites but I must admit I've usually had more success booking direct with the venue or using the other Australian travellers friend - wotif.com.

Insight in three circles

On the flight last night I read an interesting article in this months HBR, Insights in Three Circles.  The article implores business managers to look at the overlaps between what their customers want, what they do and what their competitors do.  Surprisingly companies supply many features and service attributes which customers don't value.  Of the features and activities that customers do want, it is difficult to find truely unique features not also offered by competitiors.

 

Seeing as I'm at a supplier conference this article prompted me to think about what does it take to make a good Gilkatho supplier?  What do we really want from our suppliers?  How does a supplier achieve standout success in the coffee industry.

 

My first assumption is that there is no shortage of equipment suppliers.  A brisk walk around the bi-ennial Milan trade fair shows the depth of suppy and choice available to the market.  Each brand has a set of unique features and it is a case of matching the most relevent set.

 

"Service" is the word most often bandied as the difference. Service requirements need to be defined and matched with the suppliers expectations.   I think we also need to add "communication" to th service attributes.

 

A supplier who communicates to us what they are going to do (and also communicates when things go wrong) while providing the service to our business that we need ie scheduled delivery, product updates, competitive pricing would have ot be in a winning position.

 

In a sentence:  Tell us what you are going to do and then do it.

 

 

 

 

Annual Conference

This week I'll be in Sydney for the annual Glocal Coffee distributor conference.  Global Coffeee are the Australian importers of the Jura range and the owners of the Lazumba brand. 

 

Much of the conference is, of course, devoted to promoting the sales and distribution of Jura & Lazumba.  The venue does however also provide the benefit of networking with other distributors from around Australia.  We are joined at the conference with people from each state and territory whom face similar business challenges as us.

 

Challenges that we are seeing in the market include increased competition and declining margins.  Pretty standard business issues.  The conference provides an opportunity away from the hustle and bustle of daily coffee distribution to reflect upon what we are doing and how we are doing it.  Very profitable activities for business managers.

 

As well as the business networking, hopefully we might even score a free feed (or 2).

Free On Loan resurfaces

Whenever I have discussions with owners and senior managers of other coffee manufacturers the conversation invariably turns to that of "Free On Loan" equipment (FOL).  FOL is the practice of coffee suppliers to place coffee machines and POS material with the coffee shops in return for exclusive arrangement between the two parties.

 

FOL is now common practice in the industry with most of the mid-sized coffee shops being on the end of 'freebies" from coffee companies in return for their exclusive patronage.  The largest coffee users have worked out that they can get a better deal by owning their own equipment and retaining their supply flexibility.  The smaller users do not have the volume for a supplier to justify investing the equipment.

 

The coffee shop operators don't like the aspect of the practice which locks them into the supplier and creates a lag time when they start to experience price rises and unsatisfactory service.  FOL is a barrier to change.

 

The suppliers don't like it as it increases their capital investment as they expand the business and places a constraint on growth rate.

 

Gilkatho has for the past 7 years stayed away from offering FOL equipment to coffee shops.  Instead encouraging the operators to be incharge of the quality of their equipment, the ownership of their business assets and most importantly - not to become the coffee suppliers most profitable customer! 

 

 

 

No shortage of suppliers

Since returning from the MIlan Fair in October we have been deep in thought looking at various opportunities that were discovered during the show.  The products that fall into three categories:

 

New product to Australia but a very targeted market

The first product is an innovative product which is being sold in Europe through a chain of franchised stores.  It is a non-coffee product and would require a completely new business structure and market exposure.  It is a product which will substitute for a product that is used in every Australian household today :: but :: it raises the bar on quality and experience.  Truely a great innovation but I need more information on guaging Australia's takeup before committing resources.

 

Existing product which can be relaunched to a broad market 

We were also offered distribution of a product which has been available in Australia on/off for the past 15 years.  We have a good match wih the vendor staff and we have a growing need for the product which will complement our existing product range.

 

New product for launch to our existing clients

This is by far the most exciting product.  It can be added to our existing product range, is something that can be used by 100% of our clients and can also be expanded to the clients of other coffee companies.

 

 

The latter option above presents the most attractive business case.  Standby for an Australian launch in February 2008.

 

 

 

 

 

 

Market goes higher

It was heartening to read this week of the proacticve Reserve Bank's optimism for the Australian economy.  This morning more good news with the already bouyant economy expecting good growth at least for the next 24 months.  Then, overnight metals prices climbed higher amid uncertainty of future supplies.  All good news for Australia's corporate players, but against a tight labour market.

 

Australian corporations are making investments in facilities to attract new staff and keep their current staff satisified.  Enter the office coffee machine.  To say that Australai's boom resources economy is driving the growth of Australia's ancillary business services is an understatement.  Gilkatho is very much a part of corporations striving to improve the quality of the workplace for employees.  In the early naugties, an office coffee machine was considered an luxury.  Now, good coffee at the push of a corporate button is what is needed.

 

Internally we are keeping our eye firmly on the need to service the demanding office marketplace, although not for the feinthearted when things slow down.

Central Queensland

It has been many years, 12 in fact, since I spent any significant time on business in Rockhampton. In those days as a representative of a large Australian computer company Rockhampton was a city of opportunity providing access to the mining towns as well as exposure to the success of the landowners. As I recall most of our business came from 1) Central Qld Uni 2) The local electricity board and 3)TAFE.

A quick survey of the town today showed a main retail street that must be going financially backwards. Most of the retail trade has now moved to the airconditioned shopping centres.

The town does however seem to be prospering. The airport was yesterday voted the best regional airport in Australia. The increased frequency of flights during the day now with three airlines has opened up travel opportunities never previously possible.

The Singapore air force is obvious in their presence using Rockhampton as a base for an exercise at the Shoalwater Bay training area.

With a population of 60,000 people, proximity to the mining towns and convenient access to the industrial Gladstone, Rockhampton is still very much a services economy. The major buyers in town still appear to be CQU & TAFE with the services economy providing the bulk of the economic turnover.

The two unremarkable coffees I suffered today reinforce my perception that this City is open to a competent local roaster. No - Gilkatho isn't opening here...but there is certainly opportunity for the right operator.