“In good times people party, in bad times people ponder,” declares self-help guru Tony Robbins. If your business has slowed during the country’s coronavirus shutdown, you most likely have pondered how to jumpstart your sales and marketing efforts. Here are some immediate actions to take:
● Uncertainty in the market propagates anxiety, and undermines comradery and enthusiasm among your workforce. To quell your employees’ fears and instill hope in your shop’s recovery, share your plans with your employees. In addition to communicating your proposals regarding health protocols, explain your business initiatives and keep your messaging positive.
● Contact your current customer base via email blasts, direct mail, newsletters or social media, updating them on your status. An effective way to maintain contact is to make monthly phone calls to your key customers. If you use a customer relationship management (CRM) program, you can schedule the next call date. Monthly calls can also help you to ferret out new opportunities and prevent account attrition.
● If traditional advertising and sales promotion was effective for you in the past, restart your efforts if you had suspended it. Marketing in a down market is effective in recovering when the economy picks up.
After taking steps to reestablish lines of communication with your existing customers, consider the following business strategies to supplement lagging sales.
Increasing Market Share.
The safest strategy for growth is to sell more of what you are already selling to the target market that you are selling – in other words, increasing your market share by taking it from your competitors. This approach may be the safest path to follow as opposed to pursuing new markets, manufacturing a new range of products or expanding into a new geographic territory.
Strategy for Increasing Market Penetration. In the words of one sales professional, “growing your market share is all about the fundamentals. It’s no Rubik’s Cube.” The fundamentals include:
i. Identify prospects in your current market, who you are not currently selling. You should continually add to your database of potential customers.
ii. Quantify the sales potential. To determine sales potential, you could estimate the number of target accounts and multiply that by the average revenue for an account. Another way to estimate market potential is develop and maintain a target list of accounts in your database. As you or your salespeople contact these accounts, you should assign a sales potential. This list can also form the basis for a rolling (or ongoing) sales forecast. As opportunities develop, salespeople should assign a probability for successfully closing the business.
iii. Develop a sales and marketing plan for increasing your share of the market. The plan should emphasize the basics: cold calling, networking, asking for referrals, promoting your business in print and, most importantly, on social media.
iv. After you create your plan, the key to put it into action and track your progress. Tracking entails recording the returns for the individual marketing activities. As a former employer told me, “if something works, continue to do it. If an activity doesn’t produce results, do something else.”
The strategy of increasing market penetration doesn’t work, if your market is oversaturated. In this situation, an alternate avenue is to expand into a new territory or sell to a different market segment. For example, if your business is vehicle graphics, you could expand your scope to include environmental graphics or promotional graphics.
If you are a printer, you already have mastered print technology. Your challenge is your ability to identify new opportunities and to understand the unmet needs, problems and cultural climate of an entirely new market segment.
Dealing with a different market and a different class of buyer often requires changes in sales approach and selling skills. It may also necessitate recruiting manufacturer’s representatives, who have established relationships in your target markets. In pursuing a different market segment, you will also need to modify the messaging on your website and on social media platforms.
New Product Offerings to Your Current Customers
One of the best sales strategies is to sell new products to your current customer base. Not only does the customer familiar with you, but you also understand the nature of the customer’s business and their unmet needs as well as who their decision makers are and their buying process.
In discovering what may make a good addition to your product offering, listen to your current customer base. What are their unmet needs? In what areas are their business requirements underserved? For example, if your core competency is digitally printed truck graphics, you can easily transition to produce plant safety signage, floor graphics, window treatments or wall graphics. What may be a challenge is to motivate your sales team to pursue opportunities outside of their comfort zone.
Strategic Alliances and Outsourcing.
A strategic alliance is a type of partnership in which two shops agree to share resources or information so that both companies benefit. The two shops may have different manufacturing capabilities or serve different markets or operate in different geographies.
This type of agreement may be as simple as a sign painter and digital printer passing sales leads to one another. On the other end of the spectrum, an alliance can also be more complex in which two shops join forces to pursue a particular market. For example, the two companies may target retailers in which one company produces the graphics for the windows, walls and vehicles and the other company does all of the building signage and maintenance.
These alliances may conclude with a handshake or, for the protection of both parties, may require a strategic alliance agreement, drafted by a lawyer. What type of protection are we suggesting? When sharing client information or involving proprietary technologies, you and your partner may need to draft a non-disclosure agreement, at the very least. A strategic agreement may also provide you with some degree of protection if today’s partner someday becomes a competitor.
If there is a possibility of risk in forming a strategic alliance with another company, why consider it? The obvious answer is that other company may have a capability that your shop does not have. By creating an alliance both companies benefit. Your business can now provide products or services, which opens a new revenue stream for you. At the same time, the business that you partner with can now utilize some of their unused machine capacity, which increases their revenues. It can be a perfect win-win situation.
Other than additional sales and profit, alliances offer other advantages. They can help your shop thwart a threat from a competitor. For example, a competitor may attempt to gain a foothold at one of your valued customers by manufacturing and servicing electric signage for the account with the goal of ultimately providing other graphics that you currently provide. In this case, forming an alliance with an electric sign shop would make sense.
In some cases, it may also make good business sense to outsource some manufacturing, such as large format digital printing, routing or sandblasting. If your volume of business in one aspect of sign making does not justify an investment in an expensive piece of machinery, you should consider farming that work out.
Outsourcing a manufacturing operation does not add to your overhead (shop and administrative cost), which can increase your overall burdened labor rate. Instead, in estimating the cost of a project, the outsourced manufacturing should be charged as an “other direct cost”.
I had worked for one screen printer that wanted to expand into large format digital printing. The investment in the type of equipment that they wanted amounted to several hundreds of thousands of dollars. Initially they did not have the base of business to support that investment. They outsourced that business to another printer, who did not compete with them in their market, until they increased their sales to support the purchase of their own equipment.
New Products to a New Market.
The strategy with the highest risk is entry to a new market with a new product line. It is truly like starting a new business. As a word of caution, it also has the highest failure rate. There are many other reasons that this should be the least desirable option to pursue. The cost to entry is likeliest the highest because of the cost of new equipment, additional inventory and new personnel. What’s more, this new venture could distract you and your employees from focusing on your core business.
Look before you leap. Jumping into a new market is risky. 80% of companies that make that leap fail. If you go down this road, my advice is to “Test, Don’t Guess”. By this I mean that you can mitigate your risk in the new venture, if you test the new idea first before making a major expenditure.
To improve your odds of success, you should take the following steps:
● Is your market big enough so you can make money from your venture? Based on market interviews, determine the size of the market. Then forecast the growth of that market over the next five years.
● Identify your competitors. Investigate their size and market share. Research their strengths and weaknesses.
● Determine the additional equipment, personnel, training and investment needed to enter the market.
● Calculate your break even point (or how much you need to sell to cover your costs) and return on your investment.
● Develop a sales and marketing strategy.
Selling new products into a new market using your current sales people is often a sales strategy doomed from the start. I have seen many companies lead their sales force down this rabbit hole. I cannot think of one example when this strategy has ever been a great success.
The main reason that this strategy doesn’t work is that it involves change and most sales people resist change. Learning a new product that involves a new technology can be as easy as learning a foreign language. (In other words, not easy at all.) What’s more, you compound the challenge by asking your sales people to blaze a trail in a new market, where they have no base of customers, no network contacts and no understanding of the prospect’s culture or needs.
Instead of trail blazing, sales people almost always take a path of least resistance. For those sales people who are willing to follow your lead into a new field, the danger is that this venture distracts them from properly serving your existing customer base. In an attempt to create a new revenue stream, you suffer an increase in customer attrition rate.
If you attempt to break into a new market, my recommendation is to recruit manufacturer’s reps, who understand the market, who have a network of business contacts in that market and who already have existing base of business among the type of prospects that you are targeting.
Don’t expect to be a great success, if you don’t do your homework. When conducting your market research, you must interview a large sampling of target accounts to identify market needs, decision makers and price points.
Having all your marketing and production ducks in a row is also critical to successful entry into a new market. Preparation of marketing support materials should include updates to your website, promotional literature, email blasts and news releases. Before making any announcements, make sure that you can produce a product at a level of quality that the market expects. Otherwise, you will lose credibility and your product launch will flop.
The key to any sales and marketing strategy begins with thorough market research. Have you clearly identified the unmet needs of your target market? To make sure that your offerings satisfy these needs, you ideally should validate your assumptions by testing.
The key, however, is taking action. In his book, Winning, former GE CEO, Jack Welch advised against overthinking and agonizing over strategy. You should pick a strategy and whatever you pick, just implement it like hell. In his words, “when it comes to strategy, ponder less and do more.”
Whichever revenue strategy you chose to expand your business, make sure that you develop a well thought out plan for establishing goals and defining needed resources to achieve them. The plan also needs to forecast the sales potential and the probability for success. Finally, your plan needs a timeline that outlines when milestones needs to be reached. Your plan should include the following elements:
● Develop a target list of prospects for your new products and services. From this list you can create a forecast.
● Survey a sampling of prospects to determine the level of interest in the proposed new products and to assess potential revenues. In launching new offerings, it is key that these products provide your shop with a unique position that differentiates your company.
● Create a list of the new equipment that you will need to buy or lease as well as additional inventory required.
● Determine how many new people, you will need to hire. According to Jack Welch, when embarking on a new venture, your success largely depends on hiring the right people with the right skill set.
● Develop a plan of action consisting of activities, responsibilities, deadlines and estimated costs. Welch states that your plan does not need to be original. There is nothing wrong with implementing the “best practices” that other businesses have used with success.
After you complete a detailed written plan, you need to bounce your ideas off of a sounding board that includes key people within your shop as well as friends in the business world. Based on your feedback, you should adjust your plan. Finally, after launching your new venture, carefully monitor your results and adjust the plan as needed.
Good Luck Selling!