Marketing and Sales
The second pillar for small business success is 'marketing and sales'.
You can have the best product or service in the world, but if you are not making sales your business will not survive for long.
Every business has to make sales to survive and prosper. If you are not making sales, you are doomed to failure.
Marketing and sales is all about:
- having products or services that your potential customers need and want,
- having the right price,
- using the right promotional tactics so that potential customers find out about you and current customers keep coming back,
- converting leads into sales, and
- having the right distribution channels to deliver your product or services; this is what business development is all about.
Ongoing business development activities, i.e. marketing and sales, are vital to both short term and long-term success.
The Difference between Marketing and Sales
While often referred to interchangeably, and both lead to the goal of selling products or services, marketing and sales are two different concepts.
I think this is a simple way to differentiate sales and marketing:
- Sales is getting the customer to part with their money to invest in your products and/or services.
- Marketing is a process of attracting, educating and creating interest of prospective customers in your products and/or services.
If you want a longer definition the Business Dictionary provides a good explanation that you can link to here.
Marketing combines a mix of elements that are often referred to as ‘the 4 P’s’ or the ‘marketing mix’:
- Product: the products and services that you offer.
- Price: the pricing strategy for your products and services including factors such as discounting, credit terms etc.
- Place: where prospective customers can see, buy and get hold of your products and services. It might involve a physical location, an e-commerce site, third-party distributors and so on.
- Promotion: the activities that make potential consumers aware of your products and/or services.
In order to fully apply the 4 P’s, you need to identify your ‘target market’.
I mentioned earlier about attending s seminar by Michael Gerber. I recall him defining marketing as being all about:
- Demographics – who is your customer,
- Psychographics – why do they buy.
Your target market consists of the people who will benefit the most from your products or services. This is your ideal customer. It's not someone you hope you'll be able to sell to, but a person who is a good match for what you're offering. If you can clearly identify this person, you know exactly who you need to get your message to. This then maximizes the effectiveness of your marketing efforts.
Create an Avatar of your perfect customer
To define your target market, create a profile for an individual who would be the perfect match for your products or services. This is sometimes called an 'avatar'.
This profile should include basic demographic information such as age, gender, location, socioeconomic status, lifestyle, family structure, etc.
It should also include psychographic information to help identify why they would buy your products or services For example, what are they worried about, what are they afraid of, what problems do they face, what are their values, likes and dislikes, shopping habits, worldview, etc.
Here are some simple questions you can ask to get started identifying your target market:
- Who are they?
- Where are they?
- What do they need?
- What problems do they face?
- What do they buy?
- Where do they buy it?
- How often do they buy it?
- How do they make their buying decisions?
- What is the best way to reach them with your marketing message?
In creating this profile, be as specific as possible. Your business should not and cannot be all things to all people. You're looking for the perfect match.
If you have more than one ideal customer, make a profile to define each unique segment of your market. For example, your offerings may be of value to people in two very different demographics. If this is the case, split your target market.
Why Should I Do Business with You?
Every business should have a unique value proposition (UVP). This is a statement that says clearly, thoroughly, and concisely what value you offer and how it's different from the products of others.
Your UVP shouldn't say that you're the best at something, but that you're the only business in the market who does it in this particular way. The UVP explains why your offering is the only one that makes sense for your customers.
Writing a unique value proposition is no easy task. It takes quite a bit of refining until you get it right. Start by brainstorming and answer these questions:
- What is unique about your offering?
- What specific problem does your offering solve and how?
- What are the key benefits of your offering that no one else gives?
Your business doesn’t have to be the first one to ever offer a particular product or service. Instead, your product may be unique because it combines two ideas or presents an old idea in a new way. It may be unique because it's the only product of its type aimed at a particular segment of the market. Brainstorm to reveal the uniqueness of what you offer.
The 4 P's of Marketing
Let's look at the marketing mix (i.e. the 4 P's of marketing in more detail.
What products or services will you offer to your target market? How do your products and/or services address the problem of your business market or niche?
- What problems do they solve?
- How are they different?
- What benefits does they offer?
This includes functionality, quality, appearance, packaging and warranties. To consider this, you must go back to the questions of ‘who is your target customer?’ and ‘why do they buy?’.
For example, if your target customers are in an affluent demographic, the reasons why they buy are likely to be significantly different to those in a demographic that is less well off.
As a generalization, the more affluent demographic will be more influenced by quality, packaging and appearance whereas the less affluent demographic will be more influenced by price.
Selling business to business
Similarly, if you supply products and services to business, your products or services will be different if your target customer is a large business than if it is a micro-business.
For example, in the accounting ‘industry’ there are top-tier firms that have a different range of products and services (and significantly higher charge-out rates) than smaller firms because their target markets are different. Top-tier firms focusing on the top end of town and smaller firms on more local clients. But even amongst small firms there are differences, with some positioning themselves as compliance (tax and government compliance) experts, others as small business consultants or experts in particular industries and more.
What do consumers typically hate about dealing with your industry?
I have worked with a number of clients over the years in the plumbing and electrical trades. One of the questions we ask is: what is it that customers hate most about dealing with a trade person? The answers often came back to not arriving on time and leaving a mess when they are finished. So, they changed their ‘product’ by offering an audacious guarantee about arriving on time and not leaving any mess. This enabled them to promote a unique value proposition and increase their prices.
There are many more examples like this. And it all gets back to those questions:
- Who is your target market?
- Why do they buy?
- What problems do your products solve for your target customer?
- How are your products or services different?
- What benefits do your products offer?
And think outside the box:
- Can you reposition any products or offer additional benefits to meet new opportunities?
- Could you bundle products to add perceived value to your offers?
- Can you add a special feature that competitors do not offer?
Price is one of the most pressing and challenging issues small business owners face. What do you charge for your products or services?
This decision can be agonizing!
- What if your price is too high and nobody buys?
- What if your price is too low and it looks like it’s cheap?
- What if your price is too low and you don’t make enough sales to cover your costs?
Price is vitally important no matter what you're selling. Small changes in price can generate dramatic results. You could be losing revenue by under-charging for your products or services. On the other hand, you may be losing customers and sales by charging too much.
Price is the factor that has the largest impact on sales and profits.
Consulting firm McKinsey & Co. studied Global 1200 companies and discovered that if they increased their prices by just 1% while demand stayed constant, on average profits would increase 11%. This small change in price for their customers resulted in a colossal change for the companies themselves. How would raising your prices 1% help you?
An effective price strategy will not only help you sell your products or services in the short-term but also increase your profitability over the long-term. The key is to understand the fundamentals of pricing and what value you offer to your target market.
Pricing products effectively helps you:
- Meet or exceed your revenue targets
- Remain competitive by pricing your products relative to your competitors
- Retain or increase your market share
- Maintain customer loyalty and keep your customers buying from you no matter what changes in the market
- Preserve your image and reputation as a business that offers quality products at an appropriate price.
Setting the Right Price
Setting the right price is a process of:
- Identifying your target market as we have previously discussed
- Researching your competitors as well as market trends to ensure your prices are competitive
- Positioning your product or service by identifying your unique value proposition and building your image appropriately
- Exploring a mixture of pricing strategies to decide the ones that work best for you
- Monitoring your results in order to keep your prices current and appropriate
- Understanding when to increase or decrease prices and how best to take advantage of these techniques
Place tactics are based on how you get your offering to your customers, offline or online.
Your place tactics should revolve around making it easy and convenient for your customers to find and visit you.
You should take into consideration the locations of your competitors and other factors such as your distribution network.
Accessibility of your location to highways and public transit can be a factor for some offline businesses, as well as ease of access, which includes store layout (again, online or offline) and parking spaces.
Under the place category also comes distribution. Will you distribute your products directly to consumers, thus giving you total control over the sale of your goods, or sell indirectly through wholesalers and retailers? The advantage of the latter is that you can extend the reach of your product without setting up your own sales operations.
The sort of questions that need to be considered are:
- Where do people look for products such as yours?
- What kind of store sells products such as yours?
- What distribution channels do you need and how can you access them?
- Do you need a sales force or intermediaries to help you sell?
- Can you sell at trade fairs or other offline events?
- Where are your competitors selling their products?
Promotion relates to the activities that are intended to make potential consumers aware of your products and/or services.
This is all about getting the right message to the right market using the right media.
Once again we come back to the importance of identifying your target market and your unique value proposition.
By focussing your promotion on your target market, you can be very specific in crafting your message and selecting the right media. As a result, your promotion will be a lot more effective than a scattered approach.
Inbound vs. Outbound Tactics
There are two types of promotion tactics – outbound and inbound.
Outbound tactics are where you send out your message to get it in front of people. This includes many of the traditional methods like television ads, direct mail and special promotional events.
Inbound marketing is more subtle. It draws the audience's interest rather than sending out a message to them. Many types of online tactics are inbound, such as content marketing, SEO, opt-in newsletters, and sharing content on social media.
Outbound tactics can still be highly successful, but in general, there has been a shift to inbound marketing for several reasons:
- It's cheaper and easier to do.
- People are inundated with so many marketing messages on a daily basis, many outbound marketing messages get ignored.
- It simply fits with today's market, where people consume content and base their buying decisions at least in part on this content.
Consider using both inbound and outbound tactics.
This doesn't necessarily mean that you should forget about outbound tactics and focus only on inbound.
- Inbound marketing is successful because it isn't pushy. People don't feel like they're being marketed to. Instead, they feel that they're simply consuming useful information.
- However, inbound marketing is a passive approach that is usually not enough to attract customers by itself. For example, after posting content, you'll often see a spike in traffic but the longer the content is online, the less the traffic will trickle in.
Marketers often get more dramatic results using outbound tactics.
- Outbound marketing takes a great deal more work and resources and is usually costly.
- But by reaching out directly to your market, you have an opportunity to build stronger relationships with them through this direct communication.
Most marketers choose to use both types of tactics. Using inbound only is like setting up a shop and expecting customers to simply show up. It usually requires some outbound efforts to get the traffic started. On the other hand, even if you focus on only outbound, you'll still need the inbound tactics of good content that customers value so that you’ll keep those customers coming back for more.
Offline v Online Promotional Tactics
The most common offline promotional tactic is the advertising campaign. Advertising is usually costly, but it's a great way to get your message directly in front of your market quickly.
Other offline tactics include:
- Product demonstrations
- Trade shows
- Giving seminars
- Joining and participating in your local Chamber of Commerce, etc.
- Free sample campaigns
- Direct mail campaigns
- Telemarketing, and so on.
Online promotional tactics
Many online promotional tactics take a lot less effort, cost less than offline tactics and, with virtually everyone spending a great deal of time online these days, online promotion tactics done well can bring you great results.
- Content marketing. This involves creating content, which can be text-based, visual, video, interactive, or any other kind of content, and using it to build a relationship with your audience. Content can help, inform, or entertain, but it's non-promotional in nature. Rather, it brands your business in the minds of your market, who will then come to you to buy your products and services when they need them.
- Email marketing involves obtaining names and email addresses and building a list. You then send informational content along with promotions directly to your subscribers' email inboxes. The advantage of email marketing is that it's the most personal approach, since you are marketing directly to your subscribers' email.
- Social media is another type of online promotion in which you create a profile on social media sites such as Facebook, Twitter, YouTube, and LinkedIn, and then make connections with your market there. Again, your activities here should promote in a subtle way. Offer help and information, with a little promotion thrown in. In addition to profiles, you can also create pages, groups, communities, interactive content, and other opportunities for engagement through social media.
- Publishing informational content that's of interest to your market online using Amazon's Kindle or other platforms is another tactic that establishes you as an authority in your field, helps make a name for yourself and brands your business.
- A webinar is the online version of a seminar where you teach people about something related to your business. Like publishing, this establishes your authority and builds relationships.
It's best to use a wide variety of promotional tactics. Identify the tactics that you think will work best with your target market and choose several of them through several different marketing channels. It's best to diversify because some promotions will fail or lose their efficacy over time, so it's important not to have all of your eggs in one basket.
Many business owners don’t like the idea and are often afraid of the concept of selling. Some do everything they can to avoid it. You may find yourself in this situation now, even though you know that you have to make sales to stay in business.
These may be online or offline sales, but the skills are the same.
Selling is actually an exchange of goods and services for money. In other words, you are giving something back when someone pays you money, so you have nothing to feel ashamed about.
Think of it this way:
- Selling is solving a problem for my customer
- Selling is serving them in the best way possible
You know that you want what’s best for your customers, but you can’t help them if you don’t make the sale first.
Selling is about matching what you have to offer to what customers need, so it must always be customer focused.
Your job when you’re selling is to help your customer make a decision – the right one for them.
Think of it this way: you are not selling to the customer; you are serving them.
Propose the best, most relevant solutions and focus on developing deeper relationships with your ideal customers to promote ongoing relationships and referrals.
You don’t have to be a ‘natural salesperson’.
You can learn the skills and get good at it. Those skills include:
- Listening: Active listening is the single most useful and important skill you can use when you want to build a relationship and make a sale. Active listening demands focus, concentration, and mental effort.
- Effective questioning: This goes hand-in-hand with active listening. It also needs preparation as you need to think about the type of questions that will be the most effective as you initiate conversation, explore needs and test readiness to buy.
- Educating: Educating means giving your customers all the information they need to understand what you're selling, so they can feel confident they are making the right decision.
- Collaborating: Collaboration skills are important because selling isn’t a battle of wills. You are side-by-side with your customer working towards the same goal, which is to get to the right decision. Buyers are invested in the outcome and will welcome your help if you’ve established a good relationship with them and they trust you.
- Communicating Value: Value is different for each person. It’s based on the needs and desired outcomes of the individual. You must communicate the value of your offer so that your prospect recognizes how it will help them.
- Coaching to a Decision: This is when you ask your prospect to make a decision. If you think of yourself as their coach, you will feel more confident about closing the sale. If you’ve used your listening and questioning skills effectively up to this point, you will know when your customer is ready to make a decision. Their goal is to make a good buying decision and, as their coach, you share this goal.
Remember: every business is a 'marketing business'. Marketing and sales are vital to your ongoing business success.
Let's move onto the next foundational pillar of business: Product Fulfillment.
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