Mind Your Business
The keys to successfully growing the young company
By Cary M. Weston
(Chapter 1 available online)
Wtih Snips & Snails & Puppy Dog Tails
Chapter 1 : It's Your Business, Baby!
What Do You Do?
What Do You Do Well?
The Power Of Potential
Beware The Perception
Use Potential To Your Advantage
Chapter 2 - On Who's Door Should You Be Knockin?
Evaluate Your Current Customers
Evaluate Potential Customers
Create Your Ideal Customer
Chapter 3 - When Then Answer, What Do You Say?
Cutting Through The Hype
How Big Is Your Checkbook
Speaking Points That Hit Home
Who, What, Where, When, How
Chapter 4 - You've Got Their Ear, Now What?
Putting It All Together
Set Your Goals
Tracking Your Plan
Following Up Your Plan
....With Snips and Snails and Puppy Dog Tails.
Creating a winning marketing strategy takes three key components: A market, a message and a method.
Let's face it. As a young business owner (young business as opposed to "small business" - if you should be fortunate enough to have your own business, you know there is no such thing as a "small business"), spending money on anything other than your "core business" is not a priority.
It can be confusing. It can be annoying. But it can also be disastrous if you don't. Actually, let me rephrase that. It can be disastrous if you don't do it right and do it smart.
When most young business owners think of advertising, they usually think of the local television and radio rep calling on them with promises of prosperity if they would only make a buy on their station. Or the expensive rate charged by some newspapers to put display advertising inside their pages.
Is radio and tv a bad thing? Is the newspaper a waste of money? No. Absolutely not. What is a waste of money is advertising without purpose.
So how do you avoid advertising without purpose? Well, by looking at key assets and attributes of your core business and evaluating the return on investment and the increase or decrease to your bottom line changes in sales patterns would make.
English Translation: Find out what your good at, what makes you money and how to tell people, the right people, about it. This is the essential foundation of developing a winning marketing strategy for your business.
Many people think the ads you see on tv are just created for fun and put on the air and the magic happens. The truth is, the ads are only a product of the invisible research that takes place behind the scenes in order to establish a market, a message and a method. You don't need to be General Motors to have a well defined marketing plan.
Let's look at a few ways in which the young business, or any business really, can get focused on the purpose and make their money work for them. They are simple on paper, however, don't let the simplicity fool you. These three key steps to defining your marketing plan will pay big dividends if done right.
Chapter 1: It's Your Business, Baby!
Sounds easy doesn't it? Just tell me what you do. However easy this may sound, most business owners, especially young business owners, fail to do this effectively. Why? Because each and every day, your dedicated to being "in" the business. Your focus is making sure what needs to be done gets done. Pay the bills. Enter time sheets. Talk to suppliers. Pay the bills. (seems like that one should have twice the ink.)
To effectively define your business, you need to be looking from "outside" the business. This is the objectivity that enables great marketing plans to flourish.
Perhaps your business is in telecommunications? How would you define your business to a new or potential customer? You would probably use technical terms, like routers, switches, hubs, ports, NOC and so on. To you, this industry lingo makes sense and helps you communicate what you physically do. However, it does not define your business from a marketing point of view. To do this, you need to be right to the point. How you do this varies. But really look at your business and break it into simple, key components is the beginning of defining a marketing focus. In marketing, it's hard to be too simple. Remember, the majority of the public do not live in your technical world.
I remember a former account of mine tried to explain what it is they do, but could not do it without using technical terms. We were trying to define in common language what they specialize in because 99% of the customers they deal with have no clue what the technical details are, they just wanted their phones to work.
When asked, the client's was:
"We do phone installations, upgrades, voice mail, remote mail, network configuration, wire installation, planning and consulting, we resell retail components and accessories, such as routers, switches, Cat 5….."
Needless to say, we would need to be a bit more focused if we were going to define their business to the common customer.
When it was all said and done, we decided their "services" would be Phones, Computer Networks and Consulting. Seems very simple, but until that point, they were telling people their core business was in nine different sections, if you will, and we did not have any specific areas to focus on. To break the company into three very easy to understand parts makes it easier to tell customers why they call for service.
So take a step back. Find a friend or relative that doesn't know anything about your business and try to explain what you do so they understand it. You'll be surprised how much you'll have to simplify your descriptions.
Ahh, yes. The classic problem for the young business. What do you do well? If you're like most young businesses, what you do well is make deposits in your checking account. So, when someone asks "Do you …..?", more than likely, whether you do it well or not, your answer is "Yep..we sure do." Perhaps as your business and your customer base grows, you say "NO, I'm sorry we don't do that", but just starting out, you are a master of all. I've seen it far too often.
So, this is the part where you really take a look at what you're capable of, what makes you money and what doesn't. This can be an eye opener for some, as we'll see in this example.
I once had a client that had three distinct "offerings", lets call them A, B & C. On paper, "A" represented 55% of gross sales. "B" represented 20% and "C" represented 25% of gross sales. So, when you look at things by simply how much money they take in, "A" is obviously the best, "C" is second and "B" is third.
This client had been operating for six years with a marketing budget dedicating 50% to "A" and spending the other 50% on "B" and "C" Combined.
Seems like a natural thing to do, right? This client wanted to advertise all their services, but with "A" bringing in most of the money, it makes sense that the client would push that a little more.
In our first meeting, the client talked about sales. His goal was to do something creative and different with "A" to bring in more attention and therefore, more sales. By the way, "A" happened to be priced at $49.95.
My first question was how much money he makes each time he sells "A". His answer was $49.95. Though he didn't understand the question, what I was really asking was how much money he nets each time he sells "A". We found out he didn't have that information.
Long story short, when we did an operational analysis concerning production, service and miscellaneous costs associated with the item, both fixed and variable, we found that per sale, "A" actually costs the client $51.25! That's right. The product actually costs more to offer than it was selling for. But, because it sold nearly twice as much as any of the other two, it was always thought of to be the money maker.
We also found out that the profit margin on "B" and "C" was 35% and 41% respectively.
So, how can this be? The client knows his business right? The client knows the market value of the product right? These are all assumptions we can take for granted in this example to keep it simple.
What this client did not know was that each time he sold his biggest sellers, he was losing $1.30! This was not the formula for long-term business success. The client had so much going on in everyday life of actually keeping the doors open and the floors clean that he did not take the valuable time necessary to evaluate the numbers and see that his efforts were actually losing him money. The only way he was keeping afloat as long and he did was because he was able to sell enough of "B" and "C" to pay the bills.
So what do we do? We could try to cut costs associated with "A" or increasing the price or a number of other areas, but the point is, even though the client thought this is what he did well, we actually found out it was something he did not do well with at all.
Now this may be an extreme case, but ask yourself if you really know what makes you money and what doesn't. You may be surprised to find the answer.
The reason I tell that story is because so many people think they can fix the problems with volume. They may not be making the money they want but if they can only sell more, they'll be in better shape. In that story, he may not have known that he was losing money with each product, but he certainly knew he should be making more money at the end of the day. In this case, the client knew he was not making enough profit as a whole but though he could make up for that by selling more stuff.
Which is why he wanted to vamp up the money spent on "A" and cut advertising money on "B" and "C". It's not always easy, but if we hadn't had looked at those numbers, but rather had gone ahead with the original plan of increasing advertising on "A", that client would have been accelerating it's own downfall without knowing it.
To really make your advertising and marketing dollars work for you, you really need to evaluate your business and know what will profit and what will endanger your efforts.
The Power Of Potential
Beware The Perception
Another point to consider is the opportunity or potential that exists when drawing attention to your business and your skills, a.k.a. advertising. Potential is a big word. My father in-law once stated that potential is great thing to have but a bad thing to die with.
Keep in mind that when you advertise, what you're essentially doing is inviting folks to create a first impression of your business or a first impression of you.
One of my first jobs out of college was with a nationally known rent-to-own company. Now the nature of rent-to-own is establishing long-term relationships with customers because the products are not sold all at once, but rather over time, in what I came to define as a lay-a-way plan with benefits. However, the customer was not obligated to keep the product for any length of time so at any point, they could simply have the product returned, regardless of reason.
As you can imagine, keeping the customer happy or satisfied with not only their product(s) but the company itself is key to the success of the business. Many of the customers physically came into the store once a week or once a month to make their payments. Those customers walking into the store represented a key opportunity to enhance the relationship and even discuss additional products the customer may like to have in their home. Imagine the opportunity that loyal customers represent when the come to you time after time. It's a golden opportunity to reinforce and enhance your relationship!
Impulse sales due to physical appearance were huge so the store had to look great and the products had to be displayed just right so that the customers could evaluate the features and make quick decisions about taking them home.
One store in particular was having a slow quarter and sales were not increasing, rather they were decreasing monthly. One look at the store told you that moral was down and the employees did not really understand the value of making the store look attractive. TV's were not always plugged in and turned on. The floor was not always vacuumed. Lighting was inconsistent. Hence, new and repeat customers walking into the store were not motivated to try new products because of the look of the store.
In talking with the store manager about the slumping sales and recent trend, his solution the problem was to have the company advertise more and the problem would be fixed.
What he didn't understand was that by advertising, the company would be inviting folks to enter the store and formulate a poor first impression of the company and therefore, a poor impression of the products and services they offer. This, in fact, would be a waste of advertising dollars. The real solution was to pay attention to the inside details and then invite the world to your door.
Advertising in this instance is known as throwing good money after bad. We have to be careful when we open our doors to the world and tell folks to come in. We need to be sure that we are ready to handle those new impressions an that we've done everything we can to make sure the customers are ready to do business with us should they accept the invitation.
Use Potential To Your Advantage
What we just saw was a negative potential of creating bad impressions. But potential for good impressions is even more powerful.
The greatest selling tool of all time is word of mouth. Word of mouth advertising exists because someone took a chance to try a product or service and was satisfied to the extent of referring someone else to do the same.
How many of us get "cold calls" from businesses asking us to try their product or subscribe to their publication or use their long distance telephone service? Probably everyone you know. How often do you engage in a conversation and really become interested in what they are selling? Probably not too often right? Because we feel that someone is pushing something on us that we didn't ask for. We don't know the person on the phone or on TV. We do know that the caller interrupting us at dinner time to sign me up for a credit card is doing a job they get paid for and my name happened to pop up on some list. That's not a relationship. That's a sales pitch.
But when your best friend tells you they purchased XYZ product and it was the best thing they've ever used, most often you listen. You trust that person. You believe that person and the experience now becomes real for you because someone you really know has taken the risk out of the action and is telling you the results are wonderful.
We have a similar opportunity to expand our business by looking at what we do well and adding products or services that compliment our existing business. When we do this, we have an instant customer base and an opportunity to showcase these new products or services to folks that already believe in you, believe in your business and trust the relationship they have established with you. Let me state an example of what I'm referring to.
A client of mine is a furniture retailer. A very competitive business and one that has a perception of high profits, but in reality, can be a very expensive type of business to run successfully.
Because this company does not sell highly discounted, lower quality furniture, the clientele that shop the store are looking for a positive shopping experience and a company they can trust. Price is a concern but, more importantly, value, quality and service rank just as high with their customers.
For the most part, furniture is designed to provide function, taste and appearance to the home. Not all customers are alike, but the companies best customers care about the look of their home and the look of their furniture.
If we were to evaluate other avenues this client could engage in to take advantage of the relationships they have with their customers, we could look at obvious ventures like furniture repair and restoration, carpet cleaning and general house cleaning opportunities. Certainly, these ventures fall in the realm of opportunity because the company staff already consists of recondition and repair folks.
The reason we see so many stores selling furniture, appliances and electronics in the same showroom is because they have decided that the quality decisions made by customers buying one of these product lines, say furniture, is consistent when it comes to other major household purchases, such as appliances and electronics.
These additional products or services represent the hidden potential for the young business owner that lies within the relationships of current and future satisfied customers.
However, it would be absolutely fabulous if your "customers" came to see you on a regular basis or checked in somehow. Reality tells us that most folks are too busy to keep up with what's going in your store or business unless they are looking for something to buy or actively seeking the services that you may provide. So, if they aren't coming to us, how do we go to them? It's easier than you think and that, my friend, is the power that lies within the "potential" of your young business.