Mafia Offers: Dealing with a Market Constraint (the Theory of Constraints way)
Chapter 22 of the Theory of Constraints Handbook is titled Mafia Offers: Dealing with a Market Constraint.
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Mafia Offers: Dealing with a Market Constraint PDF VERSION, Chapter 22 of the Handbook
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Here’s an excerpt:
Introduction: What is a Mafia Offer?
A “Mafia Offer” sounds like something out of a movie, not something that could seriously help you make more money in your business by increasing and controlling your sales.
Dr Goldratt first introduced the concept of a Mafia Offer in his book It’s Not Luck (Goldratt 2002, 133) . Later he defined a Mafia Offer as “an offer they can’t refuse” (Goldratt 2008, 67) . But in writing, he more frequently refers to it as an Un-Refusable Offer (URO) (Goldratt 1999, 120) and more recently he (and Goldratt Consulting) emphasizes the need to establish, capitalize and sustain a Decisive Competitive Edge (Herman & Goldratt) .
For this chapter, I will use the term Mafia Offer and have defined it as follows: “An offer so good that your customers can’t refuse it and your competition can’t or won’t offer the same.” In addition, I will refer to the operational improvements required for a Mafia Offer as the decisive competitive edge, operational advantage, or a competitive advantage.
A Mafia Offer is simply the offer you make to your market – your prospects and customers – to make them desire your products and/or services AND something that your competition can not quickly match. And, of course, the offer you make is a combination of your products, services, and how you deliver them. And for your offer — the solution you’re selling — to be un-refusable you are most likely offering something of equal or greater value than the price you are charging.
Many people confuse a Mafia Offer with a Unique Selling Proposition (USP), Customer Value Proposition (CVP), or a Sustainable Competitive Advantage (SCA).
At first blush, it would seem that a Mafia Offer is similar to these other terms you may have heard of; however, when most people are talking about these alternatives they are actually quite different from what we, Theory of Constraints experts, mean by a Mafia Offer.
USPs, CVPs, and SCAs basically take what you already do and state it succinctly and with more specificity aimed at one or a few of their customers’ problems or gaps in current market offerings. These alternatives can be Mafia Offers, but most of the time they are not. Furthermore, a SCA is, in my view, an operational or technological (although these are NOT typically sustainable) advantage and not an offer per se.
Most companies offer solutions that solve their customers various problems or symptoms. With a Mafia Offer we are addressing our customer’s core problem as it relates to doing business with our industry.
A Mafia Offer typically requires that you do something different (make operational improvements to establish a decisive competitive edge) to address your prospect’s core problem. These operational improvements allow you to actually deliver something un-refusable to your customers and something that your competition can’t or won’t do because they are not willing to or don’t know how to make the same improvements. In other words, you have to establish an operational advantage.
In this way, a Mafia Offer is a sustainable market offer built on this advantage. Mafia Offers are not a positioning or a tag line and “can only be created by satisfying a significant need of the market to the extent that no other significant competitor can.” (Herman & Goldratt) A Mafia Offer is where we start if you have a market constraint.
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