Find a Popcorn Business

Quick Summary: Build a recurring revenue base through anonymous sales that occur without direct engagements.

Abstract:

Product and service customization may seem appealing by creating a tighter bond between the company and their customers to meet their individual needs.  However, customization and scalability are generally at odds with each other.  Eliminating the need for customization or shifting the burden to the customer may seem contrary to the drive for increased customer satisfaction, but, in the long run, it is probably the best approach for the company and the customer.

Have you ever watched the popcorn popper machine at the refreshment counter of a movie theater?  With only occasional attention to restocking the machine, it not-so-quietly keeps popping corn on its own.  When a customer orders popcorn, the attendant simply selects the appropriate size container, opens the enclosed lower area, and scoops out some freshly popped corn.  What could be simpler?  During the process, no one knows when individual kerns will pop and certainly customers do not select their individual kernels.  Imagine if they did!  The theater would have to hire kernel managers and wait until orders were placed to begin the process.  Perhaps it could be made slightly more efficient by pre-heating a certain number of kernels based upon an order forecast.  In this scenario, the outrageous price that theaters now charge for popcorn could probably be justified.  However, sales volume would probably significantly decrease when customers realized that their order would be fulfilled only in time for them to watch the closing credits at the end of the movie.

Of course, the suggested alternative method to the theater popcorn model is absurd, but it is representative of many companies’ approach to order fulfillment.  As another example, imagine the sales volume of Microsoft Excel ™ if customers were required to send all of their desired cell formulas and formatting information to Microsoft for their pre-shipment configuration.  Instead of millions of copies, they would probably sell ten.  Requiring pre-shipment configurations with customer supplied parameters or fixed settings is totally unscalable for most businesses.  Instead, an “anonymous” sales model is required.  In this model, the only customer specific information required before shipment is the shipping address.  Customer specific settings, if at all required, would then be set and managed by the customer.  An excellent example of this approach is the Apple Computer home networking products.  When initially turned on, they configure themselves and begin working.  The customer can, if they choose, change the default names by following straightforward on-screen prompts.

With very few exceptions, end users will have nowhere near the level of familiarity with the product as the supplier.  Customers typically have one and only one initial experience with the product unless they are purchasing multiple identical copies.  If that experience is not positive, the product acceptance may be tainted forever.  Adding large customer service armies to help customers is a costly solution and will always be problematic.

Customer specific pre-shipment requirements virtually guarantee that company personnel will have to be involved to handle situations when customer supplied information is not complete or changes are required.  Exception handling activities add no value and can grow almost without bound as new products are offered.

The problem of obtaining pre-shipment customer information significantly increases if the company uses third parties to sell, manufacture, distribute or install the products or bring services online.  With more individuals or processes involved in the information transfer chain, the opportunities for errors increase significantly, as does the time needed to resolve issues.

There are, of course, exceptions to the anonymous sales model.  Burger King with their “Have it your way” marketing program emphasized their per customer custom order capability.  Their variations are very limited, and the concept works well due to close proximity of the customer and the “manufacturing line” that produces the product.  Few businesses are similarly configured.

An anonymous sale model also allows a company to build to stock and level load their production capacity resulting in far greater efficiencies.  Simultaneously, it reduces the opportunities of introducing defects by using standard, non-varying processes.  With standard, built to inventory products, cycle-time from the customer order to shipment can be reduced.

There is no question that developing products that do not require factory customization, but instead that can be implemented by “mere mortal” customers, places an extra burden on developers.  However, when considering the entire build, ship, fulfillment process, a “popcorn” approach is the best method of scaling operations.

 

Article Number : 3.040207   

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