It's All About Focus Baby!
Looking for that “one thing” you can do that will supercharge your sales and make your salespeople incredibly happy and productive?
Try this: Focus all your marketing energy and resources on one or more specific target markets. Believe me, it’s critical to your sales success.
But how do you do that? How do you decide what markets to target and how to target them? Won’t you be leaving money on the table by ignoring other revenue sources? And what the hell does all this have to do with building The World’s Greatest Sales Team?
Read on…
Too many companies take a shotgun approach to both their marketing and production, willing to be all things to all people and perform any task for any customer. This is a direct path to entrepreneurial hell. Neither your marketing nor production departments can support that strategy profitably or for long. You’re going to hell. You’re going directly to hell. You will not pass Go and you will not collect $100.
While most companies are guilty of this, the worst offenders I’ve ever seen were in the printing business in the 1980s and 90s. Most commercial and quick printers were happy to take any job they could get, even if it didn’t match the production equipment on their floor. “Anything that keeps the machines running” was seen as a godsend. Business cards on a 40” six-color Komori? Bring it on!
The printers who have survived and prospered during the past three decades of technological and economic upheaval have been those who focused on fulfilling specific needs for tightly-defined niche markets. They use their printing equipment with other tools to create and sell value, not printing. People don’t buy printing because they love the look, smell and feel of ink on paper. They buy printing because of what a direct mail piece, business card, product label, etc. can do to help them increase sales or operate their business.
While working for a health and wellness company in Arizona, I came across a printing company that sells exclusively to medical practices. They know what a medical practice needs (prescription pads, specialized Medicare forms, etc.) and they market those products (not printing) directly to the doctors and office managers through catalogs, a phone center and the web.
They buy equipment and hire skilled people who match their customers’ requirements, rather than using existing resources in a futile attempt to fill any order. And they manage to keep their machines and people running around the clock thank you.
Profit is found in matching needs with solutions. The greater your customer’s need and the better you are at solving it, the more you can charge. Selling commodities to large markets results in razor-thin margins. Soothing extreme pain for niche markets generates fat profits.
This approach benefits your sales team because they are only speaking to people who really need and want their offering and clearly see its benefits. These prospects make decisions more quickly and are less price-resistant. If the firm providing the solution has an intelligent marketing plan in place, the customers have come to you asking for your help, rather than you having to seek them out like needles in a haystack. In short, targeted prospects mean more sales quicker. Sound good?
Who Do I Target?
So how do you decide whom to target? The answer is more difficult to derive for start-ups than it is for existing companies. The start-up had better have a very clear target market in mind up front – based on verifiable research – if they have any hope to survive. But an established firm need look no further than their current client list to easily figure out where the low fruit is hanging.
We’ve all heard of the Pareto Principal, better known as the 80/20 rule. In sales, the Pareto Principal states that 80% of your sales comes from 20% of your customers. I would further state that, for most businesses, 90% of your sales probably comes from 50% or less of your client list. That means you could fire half of more of your customers and not lose more than 15% of your sales.
While your revenue would drop by 15% your headaches would decrease by 75%. These lesser clients have lower average ticket sizes, are more difficult to deal with, pay their bills more slowly and use up an inordinate amount of your time relative to the dollars they generate. I say let ‘em go!
But if you can’t imagine yourself walking away from any of your customers, you can target your marketing efforts and sales production toward procuring more of your Gold Star Clients.
Take a look at your ten biggest customers. What industries do they represent? How big is their company in terms of sales level and number of employees? Where are they located? What do they buy from you? Why is it that your solution is such a great match for their needs? How did they come to you in the first place? The answers to these questions will allow you to easily paint a picture of what your Perfect Customer looks like.
Starting with your single largest customer, begin the hunt for more firms that match their profile. Go to infoUSA.com and run a search for companies in that industry, of a similar size in the same geographic area or a similar distance away. You’ll be amazed at the number of firms you find.
Then create a Customer Factory based on that Customer Design and start pouring your marketing budget and sales efforts into landing two or three more firms just like them. This is a much better investment than your current shotgun approach. You will not only see a higher closing percentage, larger average ticket size and faster receivables cycle, but your production department will thank you for bringing them so many orders that are easier to process.
Now duplicate the process with your second largest customer, third largest and so on. Lather, rinse and repeat as necessary until you just can’t handle any more business.
Real-Life Stories of Target Marketing Success and Failure
I once worked with a law firm that specialized in trust and estate planning. Their wide-ranging marketing program targeted homeowners who were 45 years old or older who lived within 10 miles of free seminars they presented throughout a certain metropolitan area. They sent direct mail pieces to these people and advertised their upcoming seminars on radio stations which also targeted that same demographic.
The fish jumped into the boat, attended the seminars and signed up in droves at the end for the free, no-obligation consultation the firm offered to attendees. It was then the lawyer/salesperson’s job to close them on paid services at the end of the consultation.
They had an incredibly high closing percentage due to their intelligent application of Education-Based Marketing (explained in a future article) and because they started the whole process by targeting their most likely buyers. This is a formula for salesperson satisfaction.
A home improvement company I once worked with targeted the same market with a completely different offering. They also advertised on radio and television, exhibited at home shows and placed a lot of ads in newspapers. Their marketing message offered a free in-home estimate for qualifying homeowners who called a toll-free number.
Callers were asked qualifying questions by phone center operators who received bonuses based on the number and dollar value of sales their leads produced. The operators asked the right questions and gathered critical information for the salespeople to use during the in-home presentations.
Again, this company generated hundreds of thousands in sales and made their salespeople very happy (and financially successful) by only presenting their wares to people who had a high propensity to purchase. It seems obvious but for some reason a lot of firms still don’t get it.
For example, I have worked with a company which targets businesses who own and/or operate fleets of vehicles. There are tens of thousands of these companies in industries ranging from funeral homes and limousine services to HVAC contractors and concrete companies.
The fact that the market is so huge and fragmented is actually a problem. Which industries can derive the most value from this company’s offering? What size fleet benefits the most? Which companies are likely to be looking at this service for the first time and which probably already have a solution in place? Once we answer these questions, how do we target and present to these low-hanging lorry operators?
These questions had not only not been answered, it appeared as though they had never even been considered. The resulting low sales production frustrated their sales team to no end and generated an attrition rate approaching 100%.
One reason why firms fail – or choose not – to employ target marketing is that they’re convinced they’ll lose sales by ignoring prospects who don’t match their customer design. Let me make one thing clear: you’re not refusing to do business with other firms, you’re just focusing your energies and marketing budget someplace else, a place where you’re much more likely to find a pot of gold.
If you have a office management software suite that is great for both chiropractors and architects but, for some reason, architects see the value more easily, buy quicker and pay faster then focus your marketing and sales efforts on architects. If a chiropractor comes flying over the transom or calls you out of the blue – close him!
Once your Architect Customer Factory is humming at full speed and it’s time to start looking to build another production line, put one together that churns out chiropractors. Then focus energy and resources on them until you’ve got that one running three shifts. Then go after your third-best target market, whatever that may be. Track your results and improve your processes along the way. Lather, rinse, repeat.
The bottom line is that Laser-Sharp Target Marketing is a critical sales success factor and any company that ignores it does so at their peril. Get clear about whom you’re selling to and how you’re selling to them and you’ll make both your salespeople and your banker very happy.
If all of this sounds like a great idea but you have no idea when you’d find the time to implement it, give me a call.
Frank Felker
frank_felker@yahoo.com
866-949-2661
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Recommend0 recommendationsPublished in Market Research, Print Collateral, Qualifying Prospects, Sales vs. Production, Target Marketing, The Sales Cycle