How Do You Save a Business?
I was asked to do business development for a failing business unit. I quickly learnt that we couldn’t handle more business because we weren’t allowed to hire more people because we were losing money! You see the problem?
What I wanted was to turn the loss into a modest 12% net profit. Truly I had no idea how to do it now that business development was out. I needed to find some other levers to pull on.
I also realized that as the “business development man” I didn’t have the authority to fix anything other than sales. So I had to take charge and run it like it was my own.
I dreaded failure because at least 15 people would have been fired, and well, because all my life I have dreaded failing.
I grew up in a family of small business owners and from them I got the idea that making your own way in life is just the way life is.
From my corporate exec and largely absent father, I got fierce ambition and no bullshit.
I think I have to claim my deep-seated fear of failure and caution for myself.
On balance, though it doesn’t sound it, it’s good. Fear tempers my ambition and forces me to provide for my family, now and in the future.
And my father – though he died before I found out what he thought of me as adult – I’m quite sure he would have approved of the ambition that propels me.
Marketing Wouldn’t Save Us
So I was there to bring in new business that we couldn’t deliver on.
With no way to market our way out of trouble, I had to look inside the business.
I researched everything I could find on rescuing businesses in trouble and apart from increasing sales, there are only three other levers: increasing revenue, reducing cost of good, and reducing overheads.
I looked into each in turn in our business, and found horrors!
We’d set our prices years before and never raised them – even as wages, health insurance, cars, gas, hotels all went up in price.
Worse still, those prices had been set by looking at other companies’ prices – the wrong companies – and not on the value we delivered.
The we’d got into the habit of doing free work – because we’d got into the habit of agreeing to crazy terms and conditions.
And all of this was allowed to happen by the guy at the top and he’d spent years ‘training’ his people to work the same way.
My plan had four simple parts: get the authority to act, change the culture of the team, raise our prices, and stop doing work for nothing.
Simple But Not Easy
Well, I say that they’re simple… but not that easy.
The easiest was to get the authority – my plan took care of that.
Second was to change the approach of my team. That wasn’t so difficult because on one side was no job, and on the other I aligned pay to the way I wanted the team to act.
Pricing wasn’t too hard – though we needed to change what we were selling from ‘programming’ to ‘profit’.
Hardest of all was to negotiate out of the crazy contracts – which required a certain firmness to make our interests the customers’ interests.
Within 3 quarters I’d got the profits up to 12% net and the next full year to 22% – that’s from a loss to $2.86M profit.
For me it was the realization that sales and marketing is not the only way to boost profits. If you want a fast change, then look inside. Pricing you can change in a day, costs in a week and at expense and no risk.
Best of all, this also propelled me into the next jump – fixing small businesses.
I’m confident my father would approve, and it’s taken me back to my family’s small business roots.
Today I’d like to teach you about the three most important start up marketing tools you need to get and keep new customers.
- In person: It’s essential you meet with customers/clients in person whenever possible. This shows you respect them and take the time to work with your clients to give personal attention to each of them.
- Follow up letter: Always take a moment to send a follow up letter about what you talked about, new agreements or partnerships made and to thank them for taking the time to meet with you. Likewise, you should always send thank you letters or small gifts to partners you find success with.
- Phone call: Use a telephone call to follow up with them to talk again about the matters you talked about in your meeting and offer any assistance you can to help their business run smoothly and more successfully.
None of these will work if you don’t have a quality product/service to back you up!
Here are the key steps for putting together your start-up marketing tools:
- Research potential customers, buyers, competitors and their preferred methods of distribution.
- Talk to potential customers. Take a hard look at your product from a customer’s perspective and see what it needs to be successful.
- Follow up with your 3-step process from above.
- Develop systems for contact follow through, quality control standards and customer service.
- Develop post-sale follow up system to keep lines of communication open is customers and build on your current relationship which increases future purchases.
“Marketing and innovation produce results; all the rest are costs” Peter Drucker, management consultant
Here’s another one I love from an icon:
“If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own.” Henry Ford, Founder of Ford Motor Company
This lesson has offered you the tools to put together a start-up marketing plan that can be used over and over again to help your customer base and business grow in a manageable way. The tools offered in our FREE test drive offer these very same things.
Today you’re going to learn how to find a target market of potential customers so you aren’t wasting precious resources on blitz marketing. So, the two questions you have to ask yourself are:
- What do people really want to buy from me?
- What related products are they already buying?
Once you figure this out you will know who is more predisposed to purchase your products/services. Then, you find other businesses with the same customer base who you can customer share with. Come up with an incentive and great arrangement to encourage both of your customer bases to shop at both of your stores.
The basic concept is this:
You want to find existing businesses who have the customer profile that you are looking for to market your products/services to.
Then strike up a relationship with those business owners to work out an incentive for customers to purchase from both businesses.
As a result, you have an audience to market to and they generate an added value from their current base.
So, how do you figure this out? There is a great formula from Jay Abraham you can follow with great success.
LV = (P x F) x N – MC
Here’s what it all means:
- LV is the life time value of a customer
- P is the average profit margin from each sale
- F is the number of times a customer buys each year
- N is the number of years customers stay with you
- MC is the marketing cost per customer (total costs/number of customers)
Once you know how much you need to spend to attract a new customer, you will know how much of an incentive you can offer to a business to help attract new customers.
So, here’s your step-by-step process:
- Find companies who already have the customer base you are looking for.
- Negotiate an incentive for them to share that customer base with you.
- Focus your marketing resources to this group of predisposed customers.
If you need help working through this process, check out our FREE test drive for the most comprehensive system of marketing tools and resources.
Educate them about what, you may be thinking. Well, consider this, many businesses focus solely on attracting new customers, but you NEED to spend a good chunk of your time retaining current and former customers. These are people you already know to be a good sales potential…they’ve already bought from you!
Take the time to market and sell new products to your old customers and less time trying to sell old products to new customers and you will see a drastic change in your sales, customer quality and branding position.
Here are a couple of key elements to use to retain your current customers:
- Stay in contact: This means by phone, email, e-newsletter, in person-by pigeon if you have too!
- Post-Purchase Assurance: This means you need to follow up with customers. Your customers need to feel like they are being supported for their purchase and with the item they purchased. How many times have you purchased a product, then felt completely abandoned? Something as simple as a Thank You note with your contact or customer service information can go along way in retaining a great customer.
- Deals & Guarantees: Always offer your current customers the best deals and guarantees you have. Show them you appreciate their business or even come up with a club specifically to reward loyal customers. You can also do this with a preferred pricing option.
- Integrity: Using good business practices and simply upholding integrity, dignity and honesty go along way with customers. Let’s face it, there’s a lot of swindling and crap out there and the safer and more confident you make your customers feel, the more they will trust you and that makes for an amazingly supportive and loyal customer.
There are three cornerstone ideas to a successful business:
- Quality product/service
- Offering useful products/services that solve a problem for or enhance the life of a customer
- Offer subjects your customers find interesting
Use this approach of educating your customers and offering them real information and insight and you will be rewarded with loyalty and success.
Stop wasting all your time on new prospects while your current customers fall by the wayside!
As Jay Abraham says, “Your best prospects are your existing customers. If you’ve been putting all your marketing efforts into acquiring new customers, stop and diverts some of your resources into reselling, upselling, cross-selling to those same customers. In every ways possible – through package inserts, regular mailings, special offers – stay in touch with those customers and get them used to buying from you.”
So, there it is! Remember, our FREE test drive can help you put together the resources and tools to do exactly that. We can help you educate your customers and you can watch the benefits pay offer many-fold.