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The Financial Mentor with David Boyar: Lifting the lid on business

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Ep. 5 - Your Financial Mentor News: Demand Planning, Data Breaches, Building Culture & Values

by David Boyar |

Retail, Financial Mentor, Demand Planning

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July 17 , 2018

 

 

DEMAND PLANNING: BUILD-A-BEAR Promotion gone wrong

Children's toy maker Build-A-Bear offered a huge promotional discount for its members. A Pay Your Age campaign. This meant that if a child was three years old, they could purchase a hundred dollar bear for just three dollars. The demand was huge, causing large queues in shopping centers across the world, and eventually many customers being locked out. It caused a social media backlash when customers were angry at the company for not being able to access the promotion.

A Build-A-Bear can cost up to a hundred dollars, but under their Pay Your Age promotion, members could purchase a bear for three, four, five dollars. It caused huge demand with queues in shopping centers across the globe. Ultimately, customers were forced to get locked out. Many of them turning to Twitter to complain.

The first question is obviously. Why offer such a big promotion? Well, bricks and mortar retailers are hoping that the in store experience is gonna be what sets them apart to online retailers. This experiment proved that parents are happy to come to stores to Build-a-Bear with their children, but not if they have to wait up to three hours.

A Build-a-Bear can cost around a hundred dollars, presenting a 90 to 97% discount, so it's hard to believe that they couldn't predict such a fantastic demand. Predicting demand around your promotions is more important than ever, because ultimately, customers are gonna go online and rave about your customers service if you do it right, and complain if you do it wrong. Demand planning can come from a range of sources, but most companies are still using trusty Excel just to get it done.

Our final lesson from Build-A-Bear, after customers were locked out, they were offered a 15 dollar voucher for their time. Compared to the 97 dollar discount they were gonna get on actually being able to get their bear in store, customers weren't left happy. It's important to have a contingency plan, in case things do go bad in your business. It's important to have a payout crisis campaign, just in case things do go bad in your business.

Read more about making sure your business is operating at the right size

Managing a Data Breach: Lessons from PageUp

Recruitment software company, PageUp, had a major data breach during the week. The data breach saw hundreds of candidates personal information leaked out onto the internet. You may notice that more data breaches are being reported in the media. Well, that's because of the notifiable data breach laws that came into Australia recently. Any business turning over three million dollars is required to notify their customers if their data has been breached.

In 2018 there's an expectation of any customer you have that you are able to keep their data safe and secure. It forms a base of customer service. A data breach can be a huge risk for your business. Whilst the fines can be a cost that you'll need to pay, mass brand damage, as well as potential class actions against you from customer who have had their data leaked out onto the internet can be very harmful for your ongoing business operations.

We recommend taking out cyber insurance. This new type of insurance can protect you against any legal costs you may need to incur if you need to defend a data breach. But, this is still a reactive item. The best ways to get on the front foot, plan in your budget a certain amount to go into cyber security. Cyber security can come from training your staff, as well as having experts inside or external to your business monitoring your IT environment.

Read more: Strategic Planning Mistakes You Didn't Know You Were Making

Building culture and values in your business: envato apprenticeships

Australian tech success Envato has recently taken a dramatic step of offering an apprenticeship program for its developers. Whilst apprenticeships are traditionally seen as the domain of blue collar workers coming through the TAFE system, Envato are doing it to build the people that they want. An apprenticeship offers a huge advantage to your business. You get to take staff with general skills, and put them through the specific on job training that you need to get the outcome specific for your business.

The worker also gets to work within your team environment, learning company values and being part of your company culture from day one. For a growing, scaling business, this can become critical as your headcount balloons, and it's harder to control that core ethos you had at the start of the business with a smaller team. This is just another example of companies investing in training to keep them competitive as employers, but also to make sure their staff are equipped to do the work of the future.

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The Financial Mentor with David Boyar: Lifting the lid on business