I recently posted about an interesting ad campaign from Canada using Porsches in a wealthy suburb in Toronto. Let’s expand on this concept of really understanding your target market and personalising your approach to them.
In the video, the advertising agency Lowe Roche in Toronto Canada thought of a way to make advertising more direct and more personal for client – Pfaff Porsche. They drove the Porsche to a neighborhood of affluent families in Toronto (which was their target market), parked the Porsche in driveways and took photos.
After the pictures were taken, the team from the advertising agency produced tailored marketing pieces for each address using mobile printers. They then distributed the print outs and the residents of the neighborhood received a personalized direct mail piece.
From this creative and very unique campaign, 32% of people responded to a website where they booked a test drive. For Pfaff Porsche, this ad campaign was very successful.
But this type of campaign isn’t completely new. In fact, an advertising agency for an auto company in the Netherlands has also utilised this type of campaign and has successfully tailored their marketing strategy to their customers.
They started using street view images about a year ago in their direct mails and the response has averaged about 63% leading to a 13% increase in sales from a single direct mail. They sent 1000 direct mails and sold 130 brand new cars in one dealership. This is a sensational response!
Now, with this type of personal and direct campaign so successful, how can we expand this beyond cars? How can we apply the same principles to other products and services? Some concepts are:
For fashion, the tailored marketing strategy would be to Photoshop different clothes onto client photos. Companies could make this work by allowing people subscribe to a service where they view themselves in different clothes and accessories. The business can also send them “an outfit” once per month. You could also do something similar for sporting apparel, ski wear, sunglasses, etc?
For Real Estate, the personal approach would be presenting views of the customer and his family in their new home. Or even having a “Sold” sign superimposed over the street view of their house.
For Roofing businesses, the direct strategy would be showing customers what their house would look like with a different colour and style of roof.
But if you can’t use this type of marketing strategy in promotion, maybe you can use it to personalise a product.
Bundaberg Brewed Drinks has done this with their “personalised label” offer where you can create your own product labels using your own photos. It is also available through their iPhone apps.
What can you do to tailor your marketing to a clearly defined target market?
We are in a highly competitive world where consumers are constantly bombarded with information and advertising. You need to make your promotions cut through the clutter.
Maybe using a highly tailored approach to directly target or link your brand to the consumer is an option you should be considering?
You know, I think that over the last few decades that “business” has lost the art of managing their people. (I say “business” because obviously there are some great managers out there – but, in general, management is a lost art!)
We’ve managed to pull through the GFC (“Global Financial Crisis”) and have emerged into a market that is very competitive, with tighter margins and that is far more globalised than ever before.
There are also significant opportunities for businesses that are have the capacity and capability to embrace them. But here lies the challenge…
I am finding that most businesses do not have the necessary “middle- management” skills and personnel to pull it off.
Why is this so?
Well, in an effort to become more efficient, we have “exised the fat” and removed layers of middle-management by pushing more and more responsibility down the “chain of command”.
“Delegation and empowerment” have been the buzz words of the first decade of this century. Now, this was fine when economies and businesses grew at unprecedented rates and that being an effective sales person meant that you were quickest to the fax to collect new orders when they came through.
In the 1980’s and 1990’s, high profile CEO’s (“Chainsaw” Al Dunlap, etal) made a big impact with their “razor gangs” laying off hundreds of thousands of people, mainly middle managers, in the search for improved profits.
I believe this was short-term thinking and that the long-term effects were camouflaged by the huge economic growth from the late 1990’s to 2008.
“Money can paper over a lot of cracks” has been my mantra and since 2008, when the cash vanished, the cracks have been laid bare.
My colleague, Mike Boyle – the Sales Scientist (Mike is a leading sales consultant and if you’re having any issues with sales in your business – you need to contact him at www.banjargroup.com.au ) – has found similar issues in Sales Management and has expressed it beautifully.
Mike says “If managers are seen as by managing by results, they are actually managing by fear.
If they are seen as managing by activities, they are managing by pressure.
Neither of these management strategies will grow the capabilities of the team to meet future challenges.
They should be placing a large proportion of their time in developing and coaching their sales team to lift skills, improve knowledge and change behaviors” and he has the data to prove that this works.
I agree wholeheartedly with Mike. In essence, we have lost the art of coaching and mentoring our team members.
We are often very good at measuring the numbers and “cracking the whip” on activities but not very good at coaching our team to build skills, knowledge and change behaviours.
I believe it will be exacerbated in our changing workforce, as the “experience” of the Baby Boomers leaves the workforce and is replaced by the “enthusiasm” of Gen Y who have not been coached and developed to the same extent.
For me, this raises a couple of fundamental questions:
What are your managers doing to “grow” their people?
How will you move from a management culture based on fear and pressure to one based on mentoring and growth?
Your answers will be critical to your long term business success.
Social networking has indeed changed the world. Since its introduction, this modern phenomenon, which is also referred to as social media, has provided a new and faster way for people to connect, interact and go about with their daily lives.
Social networking may have started out as a fad, but its massive appeal has transformed it to something even bigger. And today, almost 50% of the world’s IT literate population, under 30 years old, is on social networking sites such as Facebook, Twitter, Linkedin and more.
Social networking has affected almost every person in the world in one way or another—good or bad. In fact, many people’s personal lives have changed because of it. Research shows that 1 out of 8 US couples have met through social networking sites. With things like this happening because of social media, the question is, is it only good for personal life? Or are there opportunities that businesses can take advantage of?
Social Media and Business
One of social networking’s strong points is that it gets news across—whatever it is—to millions of people—wherever they are—in real time. Gone are the days when people had to take time to find out about what’s going on in the world. These days, news is fed to people via social networking in minutes! This feature is one of the best opportunities businesses can and should definitely explore and take advantage of.
Another opportunity that social networking presents to businesses is its attractiveness or appeal to people. Aside from having a large proportion of the world’s population on it, studies reveal that social networking sites, especially Facebook, have topped other forms of media such as TV, radio and other popular internet sites like Google. This percentage ensures that business people who invest time and money to market their products and companies in social networking sites are sure to get the exposure and quotas they’re aiming for.
But with so much hype on social networking, many consider that the social media bubble is about to burst. The notion has been formulated by economists who think that all things that reach a peak will soon fall. And with this speculation, business owners ask whether investing in social media is still worth it or not?
Social Media is here to Stay
People might say that the reign of social media will soon end, and although it may be true, businesses should still take the opportunity to use it for marketing purposes because the social networking technology will be here to stay.
Yes, it is possible that Facebook and other popular social networking sites may become obsolete in a few years but it will only be replaced by something much more advanced.
Social networking sites, as the term implies, thrive on people’s natural instinct to socialize, to communicate and to interact with each other. So long as there are people in the world, social media, in whatever form will stay as a powerful tool to reach out, sell and convey a message.
Social Media is Relatively Inexpensive
With the global financial crisis, finding alternative solutions to high costs is essential for businesses to survive. And with that said, another reason why businesses should consider utilizing social networking is because it is inexpensive.
Most social networking sites are free to access by anyone, anywhere in the world. With no financial cost, businesses are able to build a profile in whatever way they want their brand to be introduced and made known to the market. But don’t be fooled. Social networking may be absolutely free, but in order for businesses to excel in this new media, hard work and patience is required.
Social networking makes businesses more vulnerable to the public eye. Just as in the “physical world”, establishing solid customer relationships and providing sincere customer service are important for business growth – they are just as important online. If businesses fail to invest the necessary time and effort in reaching out to their customers – they’re bound to fail in social media, as well.
Anecdotal evidence suggests that businesses that treat their social networking like any other physical networking opportunity are winning work from it. This requires a consistent focus and attention to the network. It will involve participation in the network, communication with other members, responding to posts, joining special interest groups and discussion forums. All things you would do in a physical networking group like a Chamber of Commerce.
Selecting the Right Network for your Business
Obviously, selecting the right social media platform for your business is important. Facebook, although the dominant player in the market, anecdotally appears to be more for Business to Consumer relationships than some other options.
LinkedIn on the other hand is one the larger Professional/Business networking sites and is much more suited to building Business to Business relationships.
Twitter, is a “micro blogging” network that seems to have appeal across both business and social networks. Some of the networks, like LinkedIn, allow you to interact with other social media like blogs, Twitter, etc such that a posting on your blog can automatically feed to LinkedIn which can then on feed a comment to your Twitter account. In this way, one activity can service multiple contact points and networks.
Choose the network that suits your business and concentrate your effort on this. This should give you a greater return for effort than spreading yourself too thin.
Countering the dangers of Social Media for Business
Like all things, social networking also has its disadvantages. One of the dangers of social media for businesses is also one of its strongest points—social networking delivers news, good or bad, in an instant. For this reason, businesses should be wary of what they say about their products and be very careful of their actions.
According to some studies, people are prone to believing what they’re friends say more than what they see on advertisements or press releases. A bad company or product reputation will easily spread via social media.
Another thing that business owners should keep an eye out for when investing in social networking sites is the possibility of having copycats. Competition can encourage anyone to do just about anything, and because social media sites are mostly free, it’s easy to copy and create false and rep-destroying profiles against a competitor. Because of this, social networking as a marketing tool is dangerous by itself.
Integration is the Key
Social Media is not the only platform for your marketing – it is one of many. And it should be integrated into traditional media and other marketing strategies such as word of mouth, relationship building and contact programs.
It is crucial for businesses to integrate social media activities with their existing marketing programs because the objective of using social media is to build relationships via an online community, just as much of your other marketing is about interacting with the physical community.
Overall, the advantages of social networking as a business tool outweigh its disadvantages. With larger proportion s of the business community involved in social media in one way or another, it is a strategy that business owners should definitely take advantage of.
We have developed a simple methodology for looking at our marketing and business development options and have called it NEAT, which stands for:
Number of Customers
Efficiency %
Average Sale $
Transaction frequency
Now, N x E x A x T = Profit
You can look at NEAT from a whole business perspective or on a business unit basis, if required. It is usually done on an annual basis.
Number of Customers simply stands for the number of Active Customers in your business. In most businesses active customers will be those that have purchased off you in the last year or two. In high turnover businesses , eg. NewsAgents, active customers could be those that have purchased off you in the last 3 months. In the building industry, it could be people that have purchased off you in the last 5 to 10 years.
In any case, count or estimate the number of active customers in your business. You can usually get this information from your bookkeeping systems although in a retail environment this maybe difficult, so estimate the number.
Efficiency is usually measured as Net Profit/Sales and expressed as a percentage. For example: if you make $100,000 Net profit on $500,000 worth of sales then your E is 20%.
Average Sale. This is an important measure because it looks at the average $ spend per sale. To determine what this is, look to your records eg. bookkeeping systems or cash registers. From a bookkeeping system, simply divide the Total Sales by the number of Invoices and cash sales. From your cash register, record the total sales $ for a period and count up the number of actual sales in the same period and divide. So how much are your customers currently spending each time they do business with you?
Transaction Frequency. Quite simply, how many times do your customers buy from you in a year? To work this out divide the number of invoices or sales calculated above by the number of active Customers. If you are in a high frequency business, this could be a number between 50 and 100 (once or twice a week) or a low frequency business eg. building this transaction figure could be 0.1 (once every 10 years).
Working out the NEAT Values for your Business
As mentioned above, multiplying your NEAT components together should give you a measure of your profit. If we break down the basic components we can see the components of sales and efficiency.
N x E x A x T = Profit (N x A x T) x E% = Profit Sales x Efficiency% = Profit
( Customers x Sales x Transactions) x Efficiency % = Profit ( 1 Transaction Customers )
Now, complete the calculation using the figures for your business: For example: if we have: 200 customers, sales of $1,000,000pa.; Net Profit Margin of 15% of sales; 5,000 invoices (transactions) per annum, then your NEAT calculation would look as follows:
N = 200 Active Customers
A = Average Sale
= Sales/Transactions = 1,000,000/5,000 = $200/ Sale
T = Transaction Frequency = Transactions/Customers
= 5,000/200 = 25 per Customer per annum
E % = Efficiency % = 15%
Check that: N x A x T = Total Sales (200 x $200 x 25 = $1,000,000)
Check that: Sales x E% = Profit ($1,000,000 x 15% = $150,000)
This is all very interesting but how do I use it?
Once you have your NEAT components, you can start to analyse your business. There are 6 easy steps:
Step #1: Start with N (Customers). How many active Customers do we have? What proportion of our total customer list are active? For example: if we have 1,000 Customers on file over the last 10 years, but only 200 are active then only 20% of our Customers are active. How can we rejuvenate the 80%? How can we attract more Customers? How do we stop the “churn” in Customers? How many of our active customers are “A Class” customers? How many are “C Class”? How will you find more A Class? Brainstorm your actions and look at the impact you could have on N. Write down the new N number.
Step #2: Improve Efficiency %. Efficiency % is calculated by profit over sales. The difference between sales and profit is composed of costs. What can we do to reduce our costs? How can we become more efficient? How can we reduce our Variable Costs? What can we do about overheads and finance costs? How does your business compare with other businesses in the same industry? Brainstorm your options and calculate the impact these will have on your efficiency %. Write this number down.
Step #3: Increase Average Sale. Look at your average sale. How does this compare with what you thought your average sale was? Most businesses over-estimate their average sale figure. How can we improve this figure? Look at adjusting your pricing? What would have to change about your goods and services for you to command a higher price? How can you package products and services to add value? How can you up-sell to better quality, higher margin goods? Can you cross-sell and introduce additional items with the sale (eg. “Do you want fries with your order?”)? Brainstorm your options and estimate your new average sale figure. Write this down.
Step #4: Increase your Transaction Frequency. How can you increase the number of times your customers will buy from you in a given period? How can you bring them back to your business on a more frequent basis? How can you keep in contact with your clients? Do you have a contact program? Why not – it is the most effective way to ensure that you are in contact with your customer base? Do you collect contact details? Do you have a loyalty program? Again, write down your options and estimate the impact on the number of transactions.
Step #5: Calculate your new NEAT. Simply multiply your new N x E x A x T to get an estimate of your potential new profit. How does it compare to your current profit levels? Is it worth an investment of time and resources to grow to this level?
Step #6: Prioritise and Action Plan. Given that most business have limited resources of capital and labour, you won’t be able to do everything on your NEAT lists. What are the 3 most important things that you need to do based on the NEAT Analysis? Select the 3 that will have the biggest impact and develop action plans to implement the solutions.
Next Steps
Do the NEAT Analysis This is simple to do. Even if you don’t have accurate figures use the NEAT concept as a basis for improving your figures.
Develop a Contact Program for your Customers and prospects as a matter of priority. This is an essential tool for any business and usually has a very quick payback period and develops long term relationships with your customers.
Contact your MindShop facilitator if you need to ask any questions or need some assistance in developing a NEAT view of your business.
Marketing is a term used to define a whole range of functions within a business and is expressed in a whole range of contexts. So exactly what is marketing?
If we pare back the rhetoric, marketing is simply the strategies we employ to move our products/services from us to the client profitably. Marketing is the process of converting prospects to customers.
It is much more than just advertising and promotion. Marketing also includes: understanding who is your target market; what is your competitive advantage; what are your product, pricing and distribution strategies as well as promotion & advertising. It is the combination of these factors that determines the effectiveness of your marketing programs.
If we think in these terms it becomes obvious we need to review and expand effort into these strategies during tough times.
The Sales Conveyor Belt
In order to survive we must maintain momentum with our sales. Think of the sales effort as a long conveyor belt of “prospects” being loaded one end and sales unloading (completed) at the other. There are some losses along the way so that not every prospect becomes a customer.
The more raw material (prospects) we can load the more opportunity we have to create sales. In some cases the more prospects being delivered the more selective we can be about whom we want to convert into a sale.
If we stop loading the conveyor belt with prospects, even for a short period, how long must we wait before the next batch are loaded and arrive to us ready for conversion into sales?
It will vary greatly from one type of industry to another however the research is clear and cites five times as the average number of contacts that need to be made with a prospect before they are likely to be getting close to conversion. And this figure relates to prospects who actually need the service anyway!
A prospect is quick to say “No!” which to the seasoned sales person actually means “not yet”. The industry averages are that the average sales person stops selling after 2 “No’s” and the average customer will buy after 5 offers or contacts.
So the loading of the conveyor must go on, especially in tough times.
This however can be difficult when profit and cash flow figures are constantly moving our focus toward expenditure reductions rather than expansion. This environment provides us the opportunity of being creative with our strategies to maintain volume prospects and therefore sales conversions in tough times.
How diverse is your promotions strategy?
Advertising is expensive and alone is not the most efficient way to secure prospects. So where can we boost our promotional or prospect gathering efforts without necessarily increasing expenditure?
Rule one in business, and therefore marketing, is to attack with an integrated plan.
This means that any promotional activity you plan must leverage off another. For example if you intend running an industry seminar as a means of adding value to your customers while raising your company profile, what support activities will you engage to maximise the effect? Advertising, direct mail, press releases? What will be the next major activity you will use to leverage off the success of the seminar?
Develop a Contract Program
Even a simple contact program woven into your promotional plan will greatly assist in maintaining volume onto the conveyor.
What is a contact program? It is a simple system for maintaining the profile of your company in the mind of the client and prospect. There are 5 simple steps to creating a contact program:
Group your customers into A, B, and C class customers by defining the characteristics that make a great customer and scoring each customer against this criteria. It might include: Spending level, fit with your strategic direction, fit with your Company culture, length of relationship, potential for growth in sales, etc. A Class are your very best customers and is where you should be focusing your internal marketing efforts.
List all the potential contact activities that you could have including: visits, phone calls, mailings, newsletters, special offers, etc.
For each Customer class decide what level of contact you will have for each activity. For example: All customers will get your newsletter. A Class customers will get a visit once per annum. B Class customers will get a Customer Service call once per annum. Only A & B Class customers will get access to special offers. A Class customers will get invited to a special event at your business.
Check that you have met the 90-Day rule. This is a basic business rule that says that each contact needs to be contacted every 90 days at a minimum.
Letting contact lapse later than 90 days will mean that you will disappear from your customers conscious thought. This is a basic rule that should never be broken. At a minimum maintain the 90 day rule with your A class customers.
Systematise your contact program. Lock it into your annual program and plan ahead for items like newsletters, offers and special events.
How do I create a contact system?
You can buy all sorts of Contact Management Software or it might be as simple as creating a client/prospect card with that persons details. By creating a 1 to 12 file each card can be filed according to the month of their next contact. Make sure you record all details and that you set up systems to collect Customer details in your business.
Because you have recorded the type of contact made previously you can easily pickup on what was discussed or send something that hits to previous conversations. This way you are adding value to the client while achieving your goal.
Your type of contact can be as diverse as your imagination and might include such things as birthday cards, industry stats, tender opportunities, client referrals.
Once a contact is made you nominate the time ahead for the next contact and simply file the card into that month.
Every month you can select the cards from the corresponding month and make contact. Its that simple. It can be useful to start a collection of information and ideas that can be used as part of your contact program.
Of course technology allows you speed up this process however for me the manual system is great as my 1 12 card box with Contact Program emblazoned across the front sits on my desk staring at me so I dont forget the importance of continually loading the conveyor.
If you would like to investigate some of the software options for Contact Management or CRM (Customer Relationship Management) then some of the more popular software titles are: ACT!2000, MAUS CRM, and Maximiser.
Conclusions
Marketing is as diverse as the many definition surrounding it suffice to say that no sales equals no business so think creatively about ways to boost your efforts in tough times.
Tough economic times provide the opportunity for the focused to put distance between themselves and their competition. Revisit your strategic plan, crank up your promotional effort and get that conveyor humming with prospects.
by Ross Holding
Next Steps
Review your Marketing. Convert it to a one Page plan so that you can manage it effectively.
Develop a Marketing. If you don’t have a Marketing Plan (or you really need to give it a “big rework”) – Develop a plan now! Don’t wait until its too late! Our on-line Marketing & Sales Training program will help you develop and apply a marketing plan to your business in less than 8 weeks. Click here for more information. Alternatively, contact your MindShop Coach.
Develop a Contact Program to keep feeding your Sales conveyor. This is a relatively simple task. Contact your Mindshop Facilitator for more information or enrol in our on-line Marketing & Sales Training Program.
For many businesses, the period of strong growth that has preceded the downturn, meant that sales skills and management did not get the attention that they deserved. As the economy slows, competition for scarce resources increases and sales are no back on the agenda – the shoe is now firmly on the other foot!
Selling in difficult times It is worth noting some key points raised by Neil Rackham (of SPIN Selling fame) in his article: “Selling tactics for difficult times”
There are several other reasons why business managers don’t plan:
Only 50% of sales people have sold in difficult times – if you have a young sales force then this proportion will be much higher;
In an economic downturn, sales cycles (from start to close) are typically 40% longer;
Many people believe that in tough times, customers buy on price – this is a fallacy as most customers will buy on value, not price;
Research has shown that during difficult times, customers will buy safety i.e.. the offering with the lowest risk. Often the perception is that the lowest risk option is to stay with the “status quo” i.e.. the current product, service and/or provider;
Committees are often involved in making economic decisions in difficult times and group decision making usually favours lower risk;
Buyers also realise that their decisions will come under more scrutiny in tougher economic times.
This means that businesses and sales people will need to adjust their strategies in order to compete effectively and to survive in a depressed economy.
Sales Survivors
Rackham’s research indicated that many sales people struggle to adjust to the “new rules” of the downturn (just as many business owners and managers struggle). There is also a group that will adapt and survive (even thrive) in an economic downturn.
In his article, Rackham outlined the key characteristics of “the Strugglers” and “the Survivors” based on research undertaken in previous downturns. This is summarised in the table below.
Strugglers
Survivors
More calls, more demos
Focused on best opportunities
Poor planning
Good preparation and planning
Just a “talking brochure”
Asks good questions
Shorter calls
Longer/deeper calls
Nervous/ rushed
Confident / In control
Low sales conversions
High sales conversions
Interestingly, research has shown that a key factor in the buying decision for customers was the “confidence” of the sales person.
Mike Boyle (sales guru from www.banjargroup.com.au) calls this “Sales Swagger” and it is an essential ingredient for good sales performance. Are your sales people confident when they sell? How can you help them to build confidence in themselves, your pricing and your products and services?
Improving your Sales Force
In a second article, Rackham expouses 5 top tips for building a world class sales force:
There are several other reasons why business managers don’t plan:
Sales Supervisors are the key to success – lift the level of supervision not the level of sales person. You don’t need better sales people -you need better sales supervision;
Fewer accounts = more sales – Research has shown that dramatic improvements in sales can come from reducing the number of opportunities that a salesperson will focus on by up to 30%. It’s the quality not quantity approach!
Create Value – Your sales people must become “value creators” or “problem solvers” rather than “talking brochures”.
Coaching brings results – ensure that your team has support at all levels from manager to supervisor to sales person. Effective coaching can often provide that external sounding board and third party accountability that can help to improve results.
Integrate marketing and sales – There are usually 2 camps in most businesses: Marketing and Sales – and they are often at war! As they are both involved in revenue generation (at least that’s the plan!) to have them working independently is a great loss. Spend the time to set common targets, integrate teams and improve communication.
However, in my experience, in many businesses there is only one camp because “marketing” is usually missing – not because they are integrated. Often businesses have a “marketing department” but it doesn’t do any marketing (apart from a Yellow Pages ad and new business cards) because their primary role is sales, not marketing. By not calling “a spade, a spade”, there is no focus on sales and performance usually suffers.
In conclusion, now is the time to look hard at your Sales Team. Are they “Sales People” or “Order Takers” ?
Make the changes necessary in sales management and systems and especially make sure that you and your team become “Problem Solvers” and sell the value behind what you do.
