Archive for May, 2014

Sales Process Caveat

Posted: May 27, 2014 in Uncategorized

Today, I want to discuss an issue related to the sales process of an organization. Sales, although often dreaded by many, is crucial to the success of any business. And remember, understanding sales translates beyond simply the selling of a product, as any business is involved in sales in some form. For example, a service related business may not sell a tangible finished good, but does have to sell themselves to a particular client. Whatever the “product” is that is being sold, understanding sales will help deliver greater efficiency to a business.

I want to touch on something I recently came across, which although it is fairly intuitive, deserves some formal attention. Any potential buyer, consumer or client, certainly cares about the economics of a deal, but I think sometimes we tend to think that is all that matters, and it’s not. Now I don’t just mean economics, as in price, as a low price obviously is only one aspect of economics, and could very well mean that the quality is poor and thus the value is not there. What I mean by economics in this sense is the value of the product is good, and typically a buyer would buy when this good economics presents itself, but then they don’t buy.

So for an example, a company sells a product that contributes a high value to the customer, for several variables, and in general if the payback on the product to the buyer is within, say 5 years, it is deemed as a viable project. Now, of course, different organizations will have their own acceptable payback or IRR, etc., but for arguments sake let us say that Company X is looking for a product that delivers a payback of under 5 years. So Company Z, is offering a product to X, with a payback of under 3 years, while delivering high quality and has a great track record of their products. Z believes they will sell very well to this company, but X says no. Why?

There can certainly be many examples of why they say no, but this is a true story and I want to use it to explain why it happened in this instance. Cultural attitudes and differences are crucial in understanding how to sell to a buyer. In this case study, X was a company in a very risk averse culture (this was an international case) and due to Z being from another country, X was far to concerned about reliability. X pitching the product in terms of economics is not going to be enough, but rather needed to understand that the barrier to a sale was assurance of reliability, not economics. The most important route Z needed to take was to emphasize the long-standing success of the product in the market and focus the attention on how reliable it is. When these concerns are met, a sale will take place.

The point I am trying to make is that do not make the mistake of only emphasizing economics of a sale, but be aware that other factors will apply. The economics will always be important to include, but overlooking other variables will impede a successful deal.

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So you have a business proposition that you are looking at developing, but don’t have a lot of resources at your expense. This is very common amongst developmental stages of businesses or withing the start-up portion of an idea. We always, especially when short on resources, need to be as efficient as we can and this applies to our marketing efforts as much as any other aspect of a business. Efficient marketing is crucial to development, as we look to maximize the outputs while minimizing the inputs, or “get the most bang for our buck” if you will. So how to we create this efficiency?

What I like to call the 4 Pillars of Efficient Marketing, are concepts that I learned first learned from Rod Hosilyk and Matt Westfield at Strategic Growth Strategies in Reno, NV and then became a believer after utilizing them. These pillars are the questions we have to ask ourselves when determining how we are going to market the business. If we answer these questions, we are well are on way to efficient marketing.

Pillar 1: Who is the customer?

This is crucial in the attempt to an efficient marketing campaign, and although it is a straight-forward concept, there is more to it than just what’s on the surface. Within this we want to know the types of customers, the primary customers, secondary ect. and REALLY know them, examples like where to reach them, where they buy, or what they look for. These are some important steps we must take before creating a marketing campaign.

Pillar 2: Why from you?

This is another way of saying what is your value proposition? Or your differentiators. What is it that makes us different from the rest of the competition? This is probably the “strongest” of the pillars because how we differentiate from the competitors is how we will succeed, and is why a customer will buy from us.

Pillar 3: How do you let them know?

This is our modes of marketing, and especially important for the efficiency goal. Here we need to know where to find the customer and what marketing channel is most important. For some it may be television ads, some QVC, social media, etc. Of course, if resources are scarce, then the higher priced channels are not going to be a reliable tool. Marketing is absolutely one area where we should focus on spending what resources we do have, so it is okay to spend here. But I am always an advocate of bootstrapping as much as possible, so don’t just throw money at marketing campaigns without doing due diligence about reaching the customer.

Pillar 4: How do you get it to them?

This will change based on the type of business of course, but it is important to understand what channels we use to deliver the final product (good or service). A great marketing campaign is only as good as the ability to deliver to the customer. This includes not only the proper channels of delivery but really focuses on logistics and supply chain. Here I want to mention the importance of our demand forecasting and capacity planning, which is making sure that we have the capacity for our expected demand. We can be successful in a marketing campaign, but if we do not accurately (to a point) forecast demand and therefore have insufficient, or too much capacity and inventory, then the campaign will not be as efficient as possible.

So now that marketing strategies are help up by these pillars, we can take steps toward growing our business while keeping our spending to a minimum due to efficient tactics.

Ode to People

Posted: May 18, 2014 in Business Development

What is the most important aspect of any business? The people. People are the drivers of business, and in more ways than one. While this may seem cliche, it can be very valuable to any business looking to grow.

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Any business is going to have people moving it along. This may be one person or a family or whatever else kind of make-up it may have, but the point is that the people within this business have to be a good fit. Business can be difficult enough without having to handle situations in which the organization itself cannot seem to function. Making sure the organization has a cohesive atmosphere is essential when planning for growth. I want to point out that this DOES NOT mean everyone needs to be best friends or act the same. Diversity in an organization is a great resource, and so do not feel as though everyone needs to be similar to each other.

What I really want to emphasize is the idea that business transactions are person to person relationships. We have heard about business to business and business to consumer, etc. but they are all person to person relationships. The reasons we should focus on this is simple: people want to deal with people they can trust. Everything we do as a business should center around the fact that we are trying to build trust within our community, whatever that community might be. This is not only a good strategy for long-term development, but also will help the day-to-day stress of running a business, because we center ourselves around a core principle of delivering our service to others, with an acknowledgement that we have a foundation of trust between us.