ARTICLE HIGHLIGHTS
Brainstorming is an important element of any successful
marketing operation; it can help you come up with new product ideas and
promotions, and even expose significant new markets. That said, brainstorming
is a really difficult thing to do well, and many companies have become
disenchanted with brainstorming because of its potential for inefficiency and lack
of results.
Many entrepreneurs believe that being the “first mover” or
first-to-market is the key to success. They’re wrong. According to a study
cited in the Harvard Business Review, 47% of first-movers have failed. These
are about the same odds any entrepreneur faces when starting a business,
whether it’s a standard-issue Laundromat or a cutting-edge new technology.
Chances are, you want to grow your business … after all,
you’re an entrepreneur! But before you hold yet another meeting designed to
motivate your employees but that somehow never makes a difference on how they
work, consider the following strategic approach to getting everyone on-board
and dedicated to helping your business expand by definining your growth
strategy:
How to Make Business Growth Happen
If you’re like many entrepreneurs, you have grown
organically, which means that many times growth happened without you setting
down firm goals in advance. While we don’t want you to change your fundamental
entrepreneurial spirit, a little planning can help you achieve even greater
success in your business and in your life.
Our clients often wonder if they have priced their products
and services appropriately, and they always wonder if they could charge more to
improve profit margins. Increasing prices without damaging your business is
often easier than you think, but it should be a carefully-managed process; you
don’t want to turn off new customers or lose existing customers by going too
high.
Three Marketing Essentials to Think About
Be close to your marketing – it’s critical for leaders to
delegate tasks, and marketing is no exception. But since marketing is likely
the No. 1 driver of your revenues, don’t make the mistake of delegating all the
responsibility to someone else. A CEO needs to maintain a solid understanding
of what’s going on at all times to make sure that the company isn’t just
growing, but that it’s growing in the right direction.
The end of the year is a good time to evaluate your marketing strategy … what works, what doesn’t, and what else should you be doing? We recommend that every business take the time to evaluate past efforts and write down at least a general marketing plan for the New Year. Even if it’s just a page or two, a strategy will set you up for greater success in marketing and business. To get started, evaluate the past year, and then plan actions you should take in this one.
A powerful, consistent brand is important for two reasons.
First, it allows your clients and prospects to understand exactly what you do
and why they should purchase from you. Perhaps even more importantly,
especially for a busy entrepreneur, is that having a brand identity in place
means that you aren’t constantly starting from scratch when you market your
business. In fact, it will streamline all your activities, from making a sales
call to creating a brochure, and make your marketing activities much simpler as
well as more effective.
One of the most important and hard-to-attain attributes of a successful brand is a good reputation. Whether you’re choosing a new accountant or a new car, you consider brand reputation, often subconsciously. Your company reputation can affect your business – from securing financing to attracting talented employees and loyal customers, reputation makes a huge impact. When building your business, consider how it weighs in on some of these important attributes of reputation.
It’s been shown that the more customers you get, the further
you distance yourself from them as individuals. While in the beginning you were
(hopefully) intimately in tune with what they wanted and needed, chances are
that time constraints have interfered with your ability to listen carefully for
important clues about what your customers really value. This can mean that you
are missing out on opportunities to introduce new products or market existing
products more effectively.
The most common mistake when identifying a target audience
is deciding that your product is suited to “everyone” or “all women (or men).”
Defining your audience this broadly is unreasonable and will not help you
market more effectively. Your goal is to whittle your audience down as much as
possible.
Sales lie at the heart of every for-profit business.
Regardless of whether you’re a sole proprietor making calls to customers
yourself or you’re managing a nationwide salesforce, it takes a lot of energy
to keep sales moving in a constantly-upward direction. To help maintain growth,
we recommend conducting a sales check-up once per quarter to make sure you are
maximizing your profit potential.
Maintaining a steady stream of business can be a challenge,
no matter what size company you run. To keep your revenues rolling, you need to
constantly market your products and services. This is no small task, and many
businesspeople become exhausted trying to maintain meaningful contact with
customers and prospects.
Are you maximizing every opportunity to tell your clients
exactly why your product or service is the best? Here are four strategies to
improve your sales communications.
We have worked with many small businesses that built their
marketing strategy like a dune buggy: first you start with a basic functional
vehicle and then add bits and pieces as you go. The result is rugged, tough,
and gets the job done. Dune buggies are useful when you’re just getting started
and have a limited budget and time. It’s very possible that your dune buggy was
the only way to get your company off the ground.
Just-Do-It Marketing: E-Newsletters
Marketing doesn’t have to be complicated or difficult – a
lot of the time you simply need to do something as opposed to nothing. We find
that many of our clients want to do some sort of regular communication or
newsletter for clients and prospects, and have been thinking about it for
years, but they just feel like it would take too much work to get off the
ground and to keep it going.
Everyone knows how important marketing is, but somehow it
always falls to the bottom of our to-do lists. Our recommendation: set aside 30
minutes each day during which you and everyone on your sales team focuses
exclusively on reaching out to potential clients. Here are some ideas and the
estimated time required for each. All three activities add up to 600 minutes
per month or just 30 minutes per day.
In 2005, marketers spent an average of 44% of their
marketing budgets online.* Depending on the business you are in, online
marketing could be one of the most effective and low-cost options available to
grow your revenue – the challenge is figuring out how best to use the Web. There
are numerous ways to spend an online budget. Here are some effective tactics
that you might consider.
Some small to mid-sized businesses occasionally get lucky or
have truly amazing breaking news to offer. However, getting favorable media
coverage is more often a long, at times arduous process. It’s often surprising
to entrepreneurs how much time and effort goes into securing a small story in a
seemingly “easy” publication that they’ve been reading for years.
Full-Length Articles
Brainstorming is an important element of any successful
marketing operation; it can help you come up with new product ideas and
promotions, and even expose significant new markets. That said, brainstorming
is a really difficult thing to do well, and many companies have become
disenchanted with brainstorming because of its potential for inefficiency and lack
of results.
Don’t blame the method though; blame its implementation.
Here are some ways to improve your brainstorming structure to make sure it
provides the powerful information your business needs to grow!
Choose the right people: you want free-thinkers who are
unconstrained by your corporate hierarchy; people who have no stake in “how we
do things here.” Surprisingly, you don’t need people who have a deep knowledge
of your business or industry – in fact that may be a liability rather than a
benefit. Successful brainstorms might include hiring some external creative
thinkers for a few hours.
Structure matters: think of brainstorming as working with a
giant funnel. You want the funnel’s mouth to be as wide as possible, so
encourage the group to think broadly. As you work through the process, you can
begin to guide your group towards a narrower opening. The “narrowing” process
should not feel restrictive to your group though –you want to make sure you
don’t stifle any budding ideas.
Many entrepreneurs believe that being the “first mover” or
first-to-market is the key to success. They’re wrong.
According to a study cited in the Harvard Business Review,
47% of first-movers have failed. These are about the same odds any entrepreneur
faces when starting a business, whether it’s a standard-issue Laundromat or a
cutting-edge new technology.
One of the key challenges is that companies overvalue
innovation, while consumers undervalue them. Research by John T. Gourville of
Harvard Business School has suggested that while consumers are skeptical about
innovation and distrustful of the benefits of a new product, companies are
convinced that consumers are begging for innovation and will automatically
believe that “new” equals “better.”
An example of misgauging consumers’ desire for innovation is
Webvan, the first mover in online grocery shopping. Webvan was an innovation
that in many ways made sense philosophically, but it barreled into the market
without realizing that most consumers were not ready to give up their in-store
experiences. As a result, it lost millions of dollars and declared bankruptcy
in 2001.
Today, established grocery chains like Albertsons and Vons
are making slow inroads in the online grocery market, but they’re spending very
little from a developmental or marketing standpoint. After witnessing Webvan’s
spectacular crash and burn, they’re taking baby steps towards this major shift
in changing consumers’ buying patterns.
How does Webvan’s story relate to other entrepreneurial
businesses? It is a demonstration of how over-estimating consumer demand and
the advantages of being the first-mover can lead to a disastrous financial
situation.
This doesn’t mean you shouldn’t innovate … it just means you
need to take your entrepreneurial blinders off and be realistic about the
challenges facing any new product that you want to bring to the market. Know
your customers and what they really want (and will actually buy!). Then launch
your product appropriately, with the understanding that you need to help
customers understand how you have improved the marketplace with your product.
Chances are, you want to grow your business … after all,
you’re an entrepreneur! But before you hold yet another meeting designed to
motivate your employees but that somehow never makes a difference on how they
work, consider the following strategic approach to getting everyone on-board
and dedicated to helping your business expand by definining your growth
strategy:
Set a Goal: A clear and simple goal is a critical first step
so that you and your employees know exactly what you are trying to accomplish.
The goal should be as straight-forward as possible, and it should feel
ambitious, but not out of reach. Consider your past performance, market
conditions, and the talent to which you have access, as these components can
make a large impact on your ability to succeed.
We recommend setting a financial goal because it is easy to
measure and track. Your goal will encourage certain behavior from your
employees, so avoid focusing only on revenues, which may motivate them to give
deep discounts to boost superficial numbers. Also, employees who are not
directly involved in driving revenue (e.g. salespeople) will not see how they can
contribute to achieving the goal. Rather, focus on profit margin, which will
encourage all employees to figure out ways to maximize revenue while minimizing
expenses.
For example: ABC Service Co. will increase sales by 15% per
quarter for the next four quarters, thus increasing profits by 45%.
Focus: It might seem counter-intuitive to limit your focus,
but it is a critical success factor for maximizing profits. Let’s say you offer
20 services, all with varying degrees of demand and profit potential. When
planning a growth strategy, determine which provide the largest profit margins
and also have a viable market. Focus your sales team on promoting these items.
Meanwhile, determine the largest non-fixed expenses so you can provide methods
for decreasing them. This focused approach will keep your employees on-track
and be more likely to result in profit success.
For example: We are focusing our efforts on increasing sales
of the ABC Super Package, as it is in high demand and provides a significant
profit margin for the company. At the same time, we will work to improve our
accounts receivable processes and decrease the amount we spend on outsource
vendors by doing more in-house.
Get Tactical: Describe how each person and/or department
within the company can contribute to your growth strategy. Ideally, your focus
doesn’t exclude any of your employees, so everyone can feel as if they play a
part in the overall success.
An obvious place to start is with your sales team and/or
marketing department: what will they do to drive more sales? Don’t forget the
rest of your employees – what can they do to support the goal? How can they cut
costs and be more efficient? Increased efficiency often has a much larger
impact on profits than increased sales.
Set tactical goals that each person can follow on a daily,
weekly and monthly basis. We recommend including a few tactics that are easily
achieved, a few that are of moderate difficulty, and one or two that seem out
of reach. Such a mix tends to keep motivation high. Make sure you will be able
to measure how well each person achieves the tactical goals.
Communicate: To successfully achieve your goal, everyone in
the company needs to know about it and how he or she is expected to contribute
to its attainment. Put the entire program in writing, using the simplest format
possible to avoid confusion and keeping the document to less than two pages.
Clearly lay out goals and expectations of the entire company. Additional pages
might be required to detail departmental or individual expectations and
tactical efforts.
Though you should put everything in writing, we recommend
against using written words as the sole communication tool for this effort. The
first step is to engage your senior managers, who will likely be responsible
for overseeing much of the work. They are also usually your “on the floor”
spokespeople, so they need to be up-to-speed and 100% on-board.
Meet with senior managers either one-on-one or as a small
group to explain the motivation for your growth strategy, how the strategy
works, and specifically what you expect of them as managers. Next, hold a staff
meeting to explain the program to all your employees.
Monitor: If you’re going to take the time to create a growth
strategy, take even more time to monitor and enforce its success. Too many
employees have seen their bosses set lofty goals that soon get lost in the
shuffle of everyday business. As a result, it’s unlikely they will take you
seriously when you present your growth strategy.
The only way to ensure success and get (and keep) everyone
motivated is to tell your employees how you intend to monitor success and how
you will deal with excellent, moderate and disappointing performance.
Follow Through: Most growth strategies fail in the
follow-through. They start out with all the best intentions, and might even be
perfectly planned, but as the days and weeks get in between the initial
presentation, and everyday business keeps everyone busy, there are plenty of
excuses for why the goals aren’t met. These excuses are what will get in
between you and success, and they are the reason you may have yet another year
of disappointing growth.
The only way to avoid this is to follow through on your
promises. Make sure that you are conducting the actions you personally
committed to, then check on your manangers, and finally evaluate the rest of
your employees. Follow through on the monitoring process you set in place, and
demonstrate consequences and rewards for compliance.
How to Make Business Growth Happen
If you’re like many entrepreneurs, you have grown
organically, which means that many times growth happened without you setting
down firm goals in advance. While we don’t want you to change your fundamental
entrepreneurial spirit, a little planning can help you achieve even greater
success in your business and in your life.
Here are three ways to help you achieve greater growth
results this year:
1. Write down your goals: It’s very hard to hit a target that
you can’t see, so put your goals in writing. Try to focus on just 3-5 really
important goals rather than spreading yourself too thin. Revenue is always a
good place to start. For example, take your gross sales over the past three
years and set a reasonable but difficult revenue goal for the next 12 months. Now
do the same for profitability; this will help you keep a cap on expenses
through the year.
2. Make a plan: We don’t mean a nasty, oversized business plan
that will gather dust on your bookshelf; we mean a simple, straight-forward
plan of action for achieving your goals. While it doesn’t need to be lengthy,
it does need to set some hard deadlines and clear expectations. For example, if
one of your goals is to add a new product or service by September, put together
a timeline with the mini-steps it will take to achieve the goal and who is
responsible for each step along the way.
3. Hold yourself accountable: One of the biggest challenges in
being the boss is that often there are just too many other things on your plate
to consistently focus on your long-term goals. Set a 15-minute monthly meeting
with your management team to constantly revisit your business goals and monitor
progress. Don’t have a management team? Hire a business coach or enroll a good
friend to help.
Our clients often wonder if they have priced their products
and services appropriately, and they always wonder if they could charge more to
improve profit margins. Increasing prices without damaging your business is
often easier than you think, but it should be a carefully-managed process; you
don’t want to turn off new customers or lose existing customers by going too
high.
Perceived Value
One way to increase prices without damaging customer
relationships is by adding to the perceived value of your product or service.
Perceived value is the value a customer assigns your product based on what he
believes he is getting out of it. This perception is a combination of tangible
and intangible factors.
For example, an executive going to the airport can choose a
taxicab or a town car service. Both will get her to the same place and will
take the same amount of time, but the average airport trip fee is about $25
more for a town car versus a taxi. Part of that is based on the higher cost of
purchasing and maintaining the vehicle, but most of it comes from the service’s
perceived value.
In the town car example, perceived values are both tangible
and intangible. From a tangible standpoint, the executive can see that a town
car is cleaner and roomier. Also, the seats are more comfortable, and the driver
is friendlier. The car service might also provide guarantees and other perks
that help the executive feel confident she will get to the airport on time.
Equally important though, the executive feels a powerful pull towards the town
car based on her intangible perception that executives should travel in style.
She is willing to pay more for the service in order to ride in a manner
appropriate to her status.
You might be thinking that you are in an inflexible market
and can’t possibly raise your prices. Surprisingly, there is wiggle-room in
pricing and opportunities to add perceived value in almost any industry. For
example, the supermarket industry, one of the most fiercely competitive, has accommodated
premium stores that offer better lighting, layouts, products and services in
exchange for higher prices. Like town cars, the customer is getting the same
basic product, but she is willing to pay more for the experience of shopping in
a nicer environment.
Competitive Analysis
Before you make any pricing changes, first evaluate what the
market will bear. You do this by auditing your competitors to find the range of
prices your customers are currently getting. This can be a tricky practice, as
many companies do not publish their prices, but you must find a way to at least
estimate the range of prices in the market. Create a chart listing your competitors’
price points. If you have multiple services or products, do this for each one.
In the town car example, the analysis would look like the chart on the right.
With a continuum of price points in the competitive market,
Acme Towncars can see that it is on the low end of its direct competitors. This
means it might be able to raise its price by increasing perceived value.
Defining Perceived Value
When looking to expand market penetration, it’s important to
define your company’s perceived value, especially as compared to the other
options in the market. To do this, consider the following questions:
What tangible values do your customers receive by choosing
your product or service? These are related to features, such as more
comfortable seats, on-time service, friendly staff, etc.
What intangible values do your customers recognize by
choosing your product or service? These are related to how your product makes
your customer feel. They are usually defined using adjectives such as important,
powerful, savvy, attractive, smart, etc.
Pricing Using Perceived Value
Compare your answers to the above questions to the values of
your direct competitors. One way to do this is to create a graph ranking
prices, tangible values, and intangible values.
In the town car example, we have done this on a scale of
1-4, with 1 being lowest/worst, and 4 being highest/best. You can see that
Competitor A is perfectly priced in the market – it has the lowest price and
the lowest set of perceived values. Acme Towncars has the highest level of
intangible values, and higher tangible values than Competitor B. This means it
should be able to safely raise its price to that of Competitor B ($45) and possibly
even go higher, to a price point between that of Competitor B and Competitor C
($47.50).
Marketing Perceived Value
Once you have identified your company’s perceived values and
priced your product or services appropriately, make sure that your marketing
materials and process reflect the values you most want to promote.
In conclusion, there is usually a spectrum of possible price
points, and there are many ways for you to determine how to price your
products. How you market your business can help you make sales at a higher
price – just make sure your company’s service follows through on your marketing
promises!
Three Marketing Essentials to Think About
1. Be close to your marketing – it’s critical for leaders to
delegate tasks, and marketing is no exception. But since marketing is likely
the No. 1 driver of your revenues, don’t make the mistake of delegating all the
responsibility to someone else. A CEO needs to maintain a solid understanding
of what’s going on at all times to make sure that the company isn’t just
growing, but that it’s growing in the right direction.
2. Be true to your brand – establish and stick to a single
brand identity. It’s easy to get bored and jump from one description to
another, but this dilutes the message and reduces the chances that your
customer will remember what you do. Create three key brand messages that you
really believe in, then repeat, repeat, repeat. Live and breathe your brand
messages and your customers will not only remember what you do, but they’ll
also be able to recommend you to their friends correctly.
3. Train and support your employees – no amount of flashy
marketing materials can take the place of excellent customer service, so train
your employees to make every customer feel special. Monitor employees who seem
frustrated with customers – infrequent feelings of annoyance are normal, but if
it becomes an everyday occurrence you need to look deeper and determine whether
you’re providing your employees with the tools they need to serve your customers
well.
The end of the year is a good time to evaluate your
marketing strategy … what works, what doesn’t, and what else should you be
doing? We recommend that every business take the time to evaluate past efforts
and write down at least a general marketing plan for the New Year. Even if it’s
just a page or two, a strategy will set you up for greater success in marketing
and business. To get started, evaluate the past year, and then plan actions you
should take in 2006. Here are some ideas:
Product
Evaluate: are your products still selling? What do clients
say about the products? Do you need to improve or drop some of them?
Plan: product improvements, changes and updates. Drop
products that don’t sell well or are too faulty to be improved upon.
Price
Evaluate: do customers complain about the price? If so, it
might be too high; if not, it might be too low. Check your costs and markup to
make sure you’re making enough profit, and then check your competitors to make
sure you’re pricing your products reasonably.
Plan: pricing changes in the next 12 months; new product
pricing.
Placement
Evaluate: are the places your products appear for sale
appropriate? Is there anywhere else you would like to see your products? Is
there anywhere your customers have suggested selling your products?
Plan: additional venues in which you would like your
product; venues you would like to drop.
Promotion
Evaluate: how much are you spending on marketing promotion?
What percentage of your revenue does it represent? Are you reaching your
customers effectively using current outreach methods?
Plan: a budget for marketing promotion, including paying
someone to do the work if you can’t do it yourself. Outline the outreach
methods you want to use (e.g. advertising, online outreach, direct mail, etc.).
A powerful, consistent brand is important for two reasons.
First, it allows your clients and prospects to understand exactly what you do
and why they should purchase from you. Perhaps even more importantly,
especially for a busy entrepreneur, is that having a brand identity in place
means that you aren’t constantly starting from scratch when you market your
business. In fact, it will streamline all your activities, from making a sales
call to creating a brochure, and make your marketing activities much simpler as
well as more effective.
All companies have loose brand identities, but few maximize
the potential for their brand to work for them. There are three essentials when
establishing a powerful brand that will increase revenues:
1. Write it down – a brand identity is only good when it’s used
consistently by everyone in your company. You should have a Brand Guidebook
that includes graphic standards like the colors to be used and how the logo can
be presented and the brand messages that describe your company and its
individual products.
2. Clean house – Get rid of or revise any marketing materials
that don’t reflect your brand identity. The only way identities work is when
they are used consistently, so make sure you aren’t muddying the water by having
multiple messages in the marketplace.
3. Use it! – Make sure that everyone follows your branding
structure all the time. It should be second nature for them to speak to
customers using the brand messages, and no marketing, from brochures to sales
letters to follow-up calls, should ever be created without the brand identity
as a starting point.
The power of a strong brand identity can only be realized
through consistent repetition. After working with many entrepreneurial
companies, we recognize that most have a powerful drive to constantly evolve
and change. To manage this desire, we recommend establishing an ongoing list of
changes to be made to the brand identity. Throughout the year, people can add
suggestions to the list, but they may not make any alterations to the
established brand identity unless a critical and fundamental error is
discovered.
Once per year, the company can formally revisit its brand
identity, consider the items on the list, and make changes as needed. This
system makes room for the natural desire to create and dream that is critical
in an entrepreneurial organization while still maintaining a singular brand
identity, which is critical to marketing success.
One of the most important and hard-to-attain attributes of a
successful brand is a good reputation. Whether you’re choosing a new accountant
or a new car, you consider brand reputation, often subconsciously.
A recent example of a company struggling to change its
reputation is Hyundai. After working hard to improve quality and backing its
cars with powerful warranties, many people still have a strong bias against
them; due to a number of missteps upon entering the market, they have long been
considered “cheap.” A common comment is “sure, it’s a quality car for a great
price, but it’s a Hyundai!” Even though its cars are now considered very
high-quality, it will take years for Hyundai to overcome consumer bias and
rebuild its reputation – if it is able to do so at all.
Just like Hyundai, your company reputation can affect your
business – from securing financing to attracting talented employees and loyal
customers, reputation makes a huge impact. When building your business,
consider how it weighs in on some of these important attributes of reputation:
Innovation: is your company known for continually being on
the cutting-edge? Are you up-to-date on new technologies and approaches? Innovative
companies are constantly monitoring their customers’ needs and adjusting
everything from the way they answer their phones to their product features in
response.
Financial soundness: is your company around for the
long-haul or will consumers worry that you will go out of business as soon as
they start to depend on you? This is why it’s often not the best strategy to be
the “low-price leader;” your customers want to believe that you’re making
enough money to stay in business.
Quality of products/services: does your product live up to
your marketing promises? Does it meet or exceed standards set by competitors? You may never be able to
overcome the damage done by a faulty product if consumers find it lacking when
compared to their expectations or its competitors.
Recently, I went on a short vacation to Belize where I
indulged in some shameless reading of women’s magazines. While I don’t think
they will help me “lose 10 lbs in 10 days” or “spice up my wardrobe,” they did
remind me of a critical marketing skill: listening. You see, no women’s
magazine is complete without a section delving into personal relationships.
What’s interesting is that, time and time again, all of the relationship advice
I read came back to the same simple word: listen.
Marketing has often been defined as the practice of creating
and maintaining relationships, and my reading reminded me of the critical need
to listen to our customers before marketing to them.
It’s been shown that the more customers you get, the further
you distance yourself from them as individuals. While in the beginning you were
(hopefully) intimately in tune with what they wanted and needed, chances are
that time constraints have interfered with your ability to listen carefully for
important clues about what your customers really value. This can mean that you
are missing out on opportunities to introduce new products or market existing
products more effectively.
My hope is to remind you to listen more carefully to your
customers. If you’re not in direct contact with them, get your staff to do the
listening for you. However, I still recommend that you personally talk to at
least some of your customers every month. Listening to your customers will
ensure that marketing will have a significant impact on your bottom line – I
guarantee it!
Oh, and if you go to Belize, or on any vacation, try to slip
some “light reading” in with your trade magazines and business literature;
sometimes the best business advice comes from unexpected sources!
No marketing activity is worth your time and money unless
it’s grounded in a strategy. And no strategy is worth the paper it’s printed on
if it doesn’t clearly define your target audience. After all – how can you
possibly decide how to market to your customers if you don’t know who they are?
The most common mistake when identifying a target audience
is deciding that your product is suited to “everyone” or “all women (or men).”
Defining your audience this broadly is unreasonable and will not help you
market more effectively. Your goal is to whittle your audience down as much as
possible.
Here is an example of ineffective vs. effective target
audience identification for a fictional self-directed Eastern-medicine-based
weight-loss product:
Ineffective
Women ages 18-65 who want to lose weight.
Effective
Women ages 24-33 in the top 5 most populated cities in the
U.S. who identify themselves as “hard-working,” “attractive,” and “interested
in self-improvement.” These women estimate they need to loose 5-15 lbs, tend to
read magazines such as Self, Fitness and Cosmopolitan, and are open to holistic
and complementary healthcare.
Sales lie at the heart of every for-profit business.
Regardless of whether you’re a sole proprietor making calls to customers
yourself or you’re managing a nationwide salesforce, it takes a lot of energy
to keep sales moving in a constantly-upward direction. To help maintain growth,
we recommend conducting a sales check-up once per quarter to make sure you are
maximizing your profit potential.
Conversion Rate: This is a ratio that tells you how many of
the people that your sales team encounters turn into paying customers. In a
retail store, this is the number of people who walk in the door vs. the number
who buy. In a service-based business, it is the number of people who call in
for a quote who eventually purchase from you. If you are making sales calls to
potential customers (which we recommend), it is the number of people called vs.
the number of people who turn into paying customers.
Each industry has a standard conversion rate, but the
numbers are usually unrealistic given the broad variability involved in
reporting such data. Rather than getting caught up in comparing yourself to
others, establish a baseline percentage at which your company is currently
operating and set measureable goals for improvement.
Profit Margin Per Sale: If you have an inflexible pricing
scheme, it’s simple: price your products based on how much they cost to produce
vs. the maximum price at which customers will buy them. In this case, just
review your numbers quarterly to make sure demand and/or production costs
haven’t changed. In a flexible pricing scheme, in which your customers can
bargain with your sales team, you can run into numerous reasons why profit
margins per sale fluctuate.
Generally, profits drop when your customer negotiates hard
on a deal because he doesn’t have a strong need or desire for the product
and/or he is aware that there are many competitors willing to undercut your
rate. The response of your sales person in such a situation is what will make
or break your profit margin per sale. Train your team to work with customers to
demonstrate the value of a higher price so they can keep the profit margin per
sale high.
Individual Sales Rep Performance: Almost all salespeople
have ups and downs; one bad month is normal, but six bad months in a row is
usually bad news. When a salesperson is struggling, you should address the
problem as soon as possible so that it doesn’t get worse. Keep track of each
team member’s total revenue, total profit, conversion rates, and profit margins
per sale, then compare each person to the rest of his teammates as well as to
his own past performance. Meet quarterly with each salesperson to review his
numbers, set goals, and ensure he is getting the training and support he needs
to be successful.
Maintaining a steady stream of business can be a challenge,
no matter what size company you run. To keep your revenues rolling, you need to
constantly market your products and services. This is no small task, and many
businesspeople become exhausted trying to maintain meaningful contact with
customers and prospects.
There is one easy way to keep your business growing though:
get your customers to do the selling for you! This sounds too good to be true,
and you certainly can’t expect your customers to do it all by themselves, but
it is possible to turn your most valuable customers into “customer
salespeople.” You just need to provide them with the tools they need to build
your business for you:
Make it easy to learn about your company. Make it easy for
your customer salespeople to send colleagues your way by providing
easy-to-understand marketing materials (e.g. website and brochures). The
clearer you are about what you do and what market you serve, the easier you
make it for your customer salespeople to refer business your way.
Make every experience excellent. You want to make sure that
your customer salespeople are comfortable with every aspect of your business so
they have no qualms about sending their Aunt Margie to you. Everyone from the
receptionist who answers your phone to the person who handles billing should be
well-trained in making every customer feel special and taken care of when he
interacts with your company.
Appreciate your customer sales force. This doesn’t need to be
difficult; simply acknowledge that you appreciate them sending business your
way. Send a note or give a call – just do something to specifically thank your
customer salespeople for sending you business. If you have someone who is
particularly active in referring business your way, occasionally thank her in a
bigger way by sending a gift certificate to a favorite restaurant, a gift
basket, or some other token of appreciation and recognition.
Are you maximizing every opportunity to tell your clients
exactly why your product or service is the best? Here are four strategies to
improve your sales communications.
1. Describe the need. Every product or service must fulfill a
need, or remedy a “pain” for its customers. Before assuming what the pain is,
check with your customers and make sure you’re right!
2. Make the need urgent. There are two types of needs – the
critical need and the luxury need. It’s quite easy for you to position your
product as urgent if you’re selling something critical like water in the desert
or computers in Silicon Valley, but when you’re dealing with a luxury need you
have to think a little more deeply about the drivers. For example, does Paris
Hilton need to buy another fluffy pink dog sweater? No. But she still feels an
urgent need to buy one if it’s cute enough. This is the challenge of fulfilling
a luxury need … your customers assign a level of urgency based on your
product’s perceived value. Figure out what drives this urgency (e.g. cost,
quality, cute-factor), and communicate that in your marketing.
3. Get your customers to trust you. In most cases, it’s very
hard for people to part with their money, especially if they don’t trust you,
your company, or your facility. This is one of the fundamental purposes of
building a brand – when your customers see a clear and consistent picture of
your business via brand identity, they will inherently trust you more. It’s
also why having an excellent and well-trained sales team that understands your
customers is critical.
4. Give them an incentive to buy. Incentives are commonly
thought of as dollar-based – for example, a refund on a cell phone or a discount
on a gym membership. More subtle incentives include making your customer feel
like she is getting in on a cutting-edge technology or trend before anyone else
or providing service-based incentives like the airlines’ premiere club lounges.
In short, the incentive doesn’t need to be cash-based, but it does need to have
a high perceived value to the customer.
We have worked with many small businesses that built their
marketing strategy like a dune buggy: first you start with a basic functional
vehicle and then add bits and pieces as you go. The result is rugged, tough,
and gets the job done.
Dune buggies are useful when you’re just getting started and
have a limited budget and time. It’s very possible that your dune buggy was the
only way to get your company off the ground.
Your dune buggy has some drawbacks though:
- It’s bumpy and unreliable
- It’s not giving you great gas mileage
- You can’t take it on the highway
- Be smoother and more reliable
- Give you better gas mileage
- Allow you to drive it
anywhere you want to go
We’re guessing that you’re probably ready for a car, but it
seems like a big leap from the dunes to the open road. To effectively plan your
upgrade, first figure out the parts of your business that are most profitable.
Focus your efforts on the “cream of the crop” so that you can maximize your
return on investment.
Second, establish a marketing budget. Figure out how much
you can afford to invest in marketing over the next six months. Plan exactly
how you will spend your budget based on which activities will provide the most
bang for your buck.
Finally, after investing in your upgrade, you should see an
increase in your revenues. Depending on the type of business you are in, 5-20%
of your revenues should go directly back into marketing expenses. Plan the next
six months’ budget based on your new level of revenue.
The hardest part about this process is committing to a
focused marketing strategy and then sticking to the budget. Just remember that
a car, and a good marketing strategy, is built strategically and steadily. It’s
entirely different from a dune buggy. Your ultimate goal is that smooth ride,
far better bang for your buck (gas mileage), and the opportunity to take the
open road anywhere you want to go.
Just-Do-It Marketing: E-Newsletters
Marketing doesn’t have to be complicated or difficult – a
lot of the time you simply need to do something as opposed to nothing.
We find that many of our clients want to do some sort of
regular communication or newsletter for clients and prospects, and have been
thinking about it for years, but they just feel like it would take too much
work to get off the ground and to keep it going.
In fact, if you use e-mail instead of print, newsletters are
very simple to create, and cost very little to produce and distribute.
Six tips for Successful E-Newsletters:
1. Commit to having a consistent e-newsletter – monthly or
quarterly, it doesn’t matter, but commit to something, and then make sure you
stick to your plan.
2. Build your list – this can be the tricky part. You may
already have a list of clients and contacts, or you may purchase a list, but
either way you need to make sure the list is opt-in only so that you don’t look
like a Spammer.
3. Design the template – ideally, your template should match
your overall branding, but it doesn’t need to be complicated. Keep it simple
and clean, with a lot of white space to give tired eyes a rest.
4. Write your content – short and sweet always wins in
e-newsletters. Pepper them with tips, hints and short articles that people
might actually read.
5. Send it – there is a science behind which days and times to
send mass e-mails, but a general rule of thumb is that mid-day, mid-week is
best for business communications.
6. Monitor it – you should constantly monitor your open rates
and click-through rates. These data are readily available and will help you
recognize which newsletters work and which don’t.
Everyone knows how important marketing is, but somehow it
always falls to the bottom of our to-do lists. Our recommendation: set aside 30
minutes each day during which you and everyone on your sales team focuses
exclusively on reaching out to potential clients.
Here are some ideas and the estimated time required for
each. All three activities add up to 600 minutes per month or just 30 minutes
per day.
1. Make Some Calls: spend 10 minutes researching a potential
new client and then take five minutes and give them a personalized call or
e-mail to let them know about the services you provide. This is a modified cold
call and is quite effective, especially if you are able to identify a way that
you can immediately help the prospective client.
TIME: 15 minutes/day
2. Pitch the Media: everyone knows that PR is a powerful tool,
but we usually think of it in big, expensive terms. For a gradual approach,
pick one publication and research it to get a feeling for the types of stories
covered and who writes them. Then send a concise e-mail to the appropriate journalist,
editor or assistant editor with your idea. Follow up with a phone call (you’ll
usually have to leave a voice mail) and then move on to another publication.
TIME: 4 hours/month
3. Attend Networking Events: research appropriate groups, and
then during each meeting seek out just one or two potential customers or
referral sources and focus on creating a relationship with them. This approach
can have much higher results than spreading yourself thin and trying to connect
with everyone in the room.
TIME: 1 hour/month
NOTE: It’s important not to be discouraged when the
marketing activities you’re pursuing don’t have an immediate impact on your
business. Marketing takes time and usually involves some degree of rejection.
Just remember that even if you have a 10% response rate to your outreach,
you’re doing better than many of the multi-national companies that spend
millions of dollars on marketing.
In 2005, marketers spent an average of 44% of their
marketing budgets online.* Depending on the business you are in, online
marketing could be one of the most effective and low-cost options available to
grow your revenue – the challenge is figuring out how best to use the Web.
There are numerous ways to spend an online budget. Here are
some effective tactics that you might consider:
Search engine optimization – making sure your site is highly
ranked in the search engines will ensure that potential customers will find you
at the exact moment when they’re looking for your services.
Paid search ads – paying for placement in the sponsored areas
of popular search engines means that even if you don’t come up “naturally” in
the search engine rankings, potential customers can still find you. This
technique is quickly becoming the most popular online paid advertising tactic
because of its ability to directly target potential customers when they are
ready to buy.
E-mailing potential customers based on a house list –
developing a “house list” of potential customers is a good way to keep in touch
and send reminders about the services you offer … it’s important to notice the
difference between this sort of e-mailing and rented lists.
* “Biggest Internet Marketers Rate Best & Worst Tactics
of 2005” from MarketingSherpa
Some small to mid-sized businesses occasionally get lucky or
have truly amazing breaking news to offer. However, getting favorable media
coverage is more often a long, at times arduous process. It’s often surprising
to entrepreneurs how much time and effort goes into securing a small story in a
seemingly “easy” publication that they’ve been reading for years.
After more than a decade of working with journalists, we
know that there is usually no easy way around the fact that media coverage
takes time, persistence and patience. There are three key issues that we’ve
identified to help make your media outreach efforts more successful; consider
these anytime you’re planning your PR activities:
Trade Recognition: before you set your sights on the
business publications you read regularly, try to get some coverage in trade
publications that cover your industry. Usually you have a better chance of
making an impact on your sales if you reach out to your target audience in the
publications they read regularly. Such coverage can also lend you credibility
with bigger publications.
White Papers: papers that explain your point of view and
provide industry trends can be valuable on three fronts: 1) you can use them as
marketing materials to help sell to potential customers, 2) one of the trade
publications in your industry might publish the paper, which gives you great
credibility as an industry expert, and 3) you can share the paper with
non-trade journalists to demonstrate your knowledge and expertise in the
industry.
Regular Contact: journalists are bombarded with hundreds of
story pitches every day. To break through the clutter, you need to send
targeted journalists newsworthy press releases or other valuable information
about once per quarter. The goal is to get the journalist to start recognizing
your name, your company’s name, and see that you are making an impact on your
industry.
Following are some articles about marketing that you may find helpful as you build your business: