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Oct 2008
One of my salespeople who once showed stellar potential seems to have run out of gas and is failing to meet my expectations. How can I effectively give him a “kick in the pants”?
—Anonymous
It’s bound to happen. Those enthusiastic, gung-ho, high-performing sales reps you’ve come to depend on year in and year out appear to be losing steam. What’s a business owner to do to get them back on track and producing at the levels you’ve come to expect? In the old days — and, unfortunately, to some degree still today — the remedy was a verbal kick in the pants. The manager or owner would simply bark, “Make more calls!” or, worse, “You better start selling or else…” and send the reps on their way. Today’s smart owners, on the other hand, recognize these tactics for what they are: ineffective means of trying to right a proven but slumping rep’s listing ship.
Do Your Research First
Rather than bludgeoning your reps, try taking a diagnostic and prescriptive approach. Set up times to talk with them, both individually and as a group, with the goal of determining why they’re struggling, and then creating and executing a plan of corrective action. Then, after you schedule those talks, but before you actually meet with them, take a look around your business and see if there’s anything obvious that could be causing your salespeople to lose motivation and/or enthusiasm (such as poor products, an increase in customer complaints, takeover rumors, bad press, a recent change to the comp plan, or the down economy). Consider talking to your most senior sales person — the one the others look up to and respect. See if you can glean anything from him or her. If you’re able to uncover any issues, keep them in your back pocket when you sit down with your reps.
In your one-on-one meetings, ask open-ended questions to find out why the rep is struggling. Why does he think he’s struggling? Listen, and resist the urge to interrupt and offer your own opinion. You may hear a lot of excuses; let it go for now. When he’s done complaining about external influences, ask him to look inward and consider where he himself may be falling short. This self-diagnosis forces the rep to focus on things over which he has control, and to accept responsibility for solving his own problem. You should come to the meetings with hard data that could suggest specific problem areas (if you’ve implemented a CRM system to track your salespeople’s activity and it is in fact being used, the problem area or areas will be readily apparent). Have any numbers or ratios dropped off recently, such as the number of cold calls? The ratio of calls to appointments? Appointments to forecast deals? Forecast deals to shortlist? Shortlist to close? What you learn from the numbers and what you learn from your rep will, together, dictate what you need to do to help get each rep out of his respective rut. Take detailed notes, then review, compare and analyze them for any recurrent themes.
Inspiration and Motivation
Later, in your group meeting, get all the issues they each shared with you individually up on a whiteboard or flip chart. Deal with each in turn, making it clear that you’re working with them on the issues that are out of their control and that you agree are legitimate (e.g., poor customer service, product defects) if they agree to address their own individual issues, get out of their funk, and regain their positive attitudes. Then, raising your voice, give as inspirational a talk as you can, reminding them of all the good things that can be theirs if they stay focused, get energized, and start coming to work again with a sense of purpose. Focusing on the positive — on what can be, rather than on the negative — should be the shot of motivation they need to get pumped up and back to producing at the levels you require.
Now that you’ve had your talks, what tools do you have at your disposal to help your reps turn things around? Depending on what you will have uncovered during your diagnosis, you’ll employ one or more of the following:
● Tough Love
● Empathetic Listening
● Training/Coaching
Tough Love
We’ve already seen how both motivation and inspiration can be used. But what if the issue you’re facing is avoidance of fundamentally unpleasant selling activities, such as cold-calling? In that case, it’ll be necessary to put your foot down and lay down the law. “This is part of your job; it’s not optional. Period.” I had such a situation with a rep of mine once, who acknowledged that she wasn’t making the prospecting calls she knew she needed to simply because she didn’t like doing it. When I demonstrated to her that there weren’t enough good leads coming in to give her a shot at making the income she wanted to, she quickly relearned how to dial the telephone. Occasionally, it’s simply a matter of the rep’s not wanting to take on the unglamorous but necessary aspects of sales (such as prospecting or continuing education). In those cases, a firm dose of tough love is in order. Agree on performance goals for the task, then drive home the importance of achieving that goal by emphasizing that you expect nothing short of full effort and achievement of it.
Empathetic Listening
What if you’ve detected a decrease in a rep’s energy level or enthusiasm? This could point to personal problems, or it could indicate dissatisfaction with some aspect of the job (a change in working conditions, being passed over for a promotion, perceived favoritism toward a co-worker). In such a case, empathetic listening coupled with a dose of motivation would be part of your prescription. The simple act of letting a rep get stuff off his chest can raise his energy level markedly. Perhaps assigning more challenging accounts, with potentially higher payouts, would be all that’s needed to motivate him to get moving again.
Training/Coaching
In yet another scenario, if the numbers for a rep show a noticeable decrease in, for example, the number of presentations that result in his making the shortlist, get out with your rep and find out what he may be doing in his presentations that’s leaving prospects less than enthusiastic about your product or service. Then provide him with specific coaching, either by you or, if coaching is not your strong suit, by a sales coach. As with any professional, the skills that a salesperson possesses, if not continuously used correctly, maintained and reinforced, become rusty and ineffective.
By understanding what’s holding your salespeople back and using these simple tools, you’ll be able to reinvigorate even the most moribund group of reps and turn them back into the stellar performers they used to be — and still are.
Craig James is the president of Sales Solutions, a sales productivity improvement business. He can be reached at craig@sales-solutions.biz.
Sept 2008
How do you set bonuses for key employees?
-Anonymous
Because there are so many ways to answer this question, we asked three experts.
Regardless of how a business measures its success and profitability, it’s important to know its objective. Let’s assume you have a year-end goal, whether it’s to grow your client roster, launch a new product or improve customer service. Come December 31, what should have been achieved? This is often not defined by the organization or the CEO.
Ask yourself this question: If you were on a desert island and could make only one phone call to the office, what information would you need to assess how the business is doing? Once you identify what drives your business’ success, build a bonus system around that. Eighty to 85 percent of a business’ success centers around one thing (customer service, for example).
Financially, you need to continually keep score and make sure employees can too. Set measurable results and communicate how employees are doing weekly, monthly or, at a minimum, quarterly. The quicker your staff has this information, the greater the opportunity will be for them to step up their performance and meet their goals.
In the end, the people who do more make more. Just because an employee has been with you for 10 years does not mean that employee should make more than an employee who has been with you for one year. I’m in the investment business, and if I bought a stock 15 years ago, and it did great for five years, then tanked for 10, should I hold on to it because I’ve had it since I started? In today’s economy, everyone has to be firing at 100% all the time.
Gregg S. Fisher is president and chief investment officer of Gerstein Fisher, a Manhattan based financial advisory firm. For more information, visit gersteinfisher.com or call 212-968-0707.
To develop a sound, effective, and rewarding bonus/incentive plan, keep it simple. Elaborate plans quickly become extremely difficult to manage. As plans become complex, with goals, rules and calculations, employees are more likely to perceive the incentive negatively. Because employees’ incomes and emotions are involved, developing a plan can be challenging. Expect to make program tweaks in the first few years of the plan.
Remember your employees’ line of sight. All employees may not have the ability to influence their goals through their daily activities. For example, a receptionist, unlike a salesperson, has a poor line of sight for increasing net income. Clear line of sight is essential to employee buy-in and an important consideration when determining which staff members are good candidates for bonuses. Going back to the receptionist example, you set goals such as increasing the speed of answering incoming telephone calls, improving the courtesy displayed to inbound callers as measured through observation by manager or customer service feedback survey results, or decreasing the number of lost or misrouted packages received from USPS, FedEx, etc.
Ensure that base pay is fair, equitable, and competitive. Don’t use incentives to “fix” a poor base-pay plan or stem undesired turnover. Base pay is the foundation for building all other compensation programs.
Jennifer C. Loftus, SPHR, CCP, CBP, GRP, is national director of Astron Solutions, a New York–based human resource consulting firm. She can be reached at jcloftus@astronsolutions.com.
At some point companies may find they have a lot of highly compensated people who may or may not still be motivated or really active in the business. My partners and I decided early on that at some point the higher-paid people were going to have their compensation capped, and we had to figure out compensation beyond that. For example, there’d be a guaranteed base salary amount of $100,000 and then anything beyond that would be paid as bonus based upon their individual and team performance, as well as the company’s performance. We try to pay bonuses quarterly. This gives the employees some incentive on an individual level, but also protects the company. If the company were to experience tough times, we could reduce or eliminate bonuses; we would not be forced to lay those people off.
Patricia Carabello is co-founder and principal of CMC Interactive, LLC. She can be reached at 212-401-1850, ext. 860.
July 2008 - Glenn Karaban, Karaban Labiner Associates, Manhattan Deciding where to locate If you want a presence in other locations, there are numerous factors to explore before selecting your spots. One of the key factors is taxes. Look at a state’s income taxes (including corporate tax rates and capital gains rates), property taxes, unemployment insurance and gasoline taxes. When it comes to taxes, the 15 best states are: 1) South Dakota, 2) Nevada, 3) Wyoming, 4) Washington, 5) Florida, 6) Alaska, 7) Texas, 8) Colorado, 9) Alabama, 10) Mississippi, 11) South Carolina, 12) Tennessee, 13) Missouri, 14) Ohio, and 15) Virginia; the 15 worst are 37) North Carolina, 38) Nebraska, 39) West Virginia, 40) Hawaii, 41) Idaho, 42) Vermont, 43) Massachusetts, 44) New York, 45) Rhode Island, 46) Maine, 47) Iowa, 48) California, 49) Minnesota, 50) New Jersey, and 51) District of Columbia. For state-by-state tax analysis, go to sbecouncil.org/states. Also explore tax incentives that you may be entitled to for expanding into the state. These can include tax reductions or special credits for setting up shop in economically distressed areas. Other factors include: Minimum wage — A number of states have an hourly rate that’s higher than the federal minimum wage rate. To see rates in your state, go to www.dol.gov/esa/minwage/america.htm. Workers compensation — This is a significant cost for labor-intensive companies. Health care — Some states have a guaranteed issue rule that requires insurers to issue a policy regardless of health, a rule that raises the cost of coverage. Some states also have community ratings, under which all insureds within an area pay the same regardless of health risk — another feature that raises the cost of coverage. There are also various state mandates (conditions and benefits that must be covered), which add to cost. Right to work — Some states allow workers to be employed without having to join a union or pay dues, something viewed as beneficial to employers. In addition, consider other factors such as the crime rate, housing prices, costs of litigation (some states have higher incidences of actions; others may cap recoveries), trends in state spending (to keep up the infrastructure, etc.) and public transportation. For a comprehensive state-by-state rating, click on the Small Business Survival Index at sbecouncil.org (2007 is the most recent one). Operating in another state You probably need to register your company with the new state in order to do business in it. Contact that state’s secretary of state or division of corporations for details on steps to take, or work with an attorney knowledgeable with that state’s laws. For links to key business sites within each state, go to www.irs.gov/businesses/small/article/0,,id=99021,00.html. Barbara Weltman is a nationally recognized small buisiness expert. her website is barbaraweltman.com. June 2008 - Anonymous What I would recommend you do is learn everything there is to know about that client. When we worked on an RFP for Panasonic, it started at 40 companies, then went down to four, and in the end we won the contract. At the end of the day I asked the client, “How did Progressive Promotions earn this contract? What was it about us that distinguished us from our competitors?” And they said, “You understood our business better than anybody else.” Before writing the proposal, go to your computer and do research. It’s so easy to learn everything there is to know about these corporations. It’s all public information. If I don’t know what [the customer’s] business challenges are, and I don’t know what their problems are, I can’t provide them with the solutions or products or services or manufacturing or whatever they need. That said, I have a few caveats. Number one, never make a promise you can’t deliver. Don’t inflate your promises on your RFPs because it’s going to come back to bite you. Number two, don’t make your margin so low that you can’t provide the services in the end. Particularly in the promotional products industries, people say, “Oh, I’ll do it for cost plus five [percent], cost plus 10, cost plus 20.” You can’t provide the human resources and team and creativity on margins that low. Number three, I would remind you that you’re not a not-for-profit organization, nor are they. And they’re not the lowest-cost provider in their industry; why should you be in yours? Number four, increase the negotiation pie. Expand on what they’re asking. Answer the questions exactly the way they’ve asked them and address every solution as the company has requested before proposing an alternative solution. I once went through this very difficult six-month RFP process and we did not get the contract in the end. I called the client and I asked for feedback and she said, “You did not answer the question, you offered your alternative solution without addressing our question.” So give them exactly what they want and be sure it’s perfect — no typos; be very careful with your grammar and make sure people proof it for you. More Tips for Landing Big Contracts Our three panelists gave audience members great information and shared valuable lessons learned. Here are a couple of quick tips from that discussion. Lisa Bodell, founder of futurethink, on sales: I’m in the service business and we compete with consultants and agencies, who all come [to the client] and sell with a lot of PowerPoint presentations. I do not have one product or tool in my sales kit that involves PowerPoint. Everything that I show people has to do with action. We give people tools, worksheets, diagnostics, metrics tables, questions to ask — all kinds of analytics that show them we want to be the “how to.” And you know what? People love it, because they’re really tired of listening to people talk; they want you to help them get it done. Another thing we did was, when we were launching our products, I took a survey of my clients. I said, “Tell me the price point at which you can get something approved on your credit card and not have to show your boss.” And I figured out price points based on that amount. I wanted to give people prices that they could get approved quickly for my cash flow, but also it was easy for them, not having to go through their “administrivia” to get something done. Crystal McKenzie, founder of Crystal McKenzie Inc., on solving problems for clients: Make sure that you understand your customers and their business. What you want to do is listen to the quarterly meetings; it’s very often a webinar. Find out what voice are they talking in. Pick up some of the language. Every industry has its own industry-speak, and if you want to get the attention of people in that industry, at [the executive] level, you’ve got to speak their language. I myself am a “corporate transplant.” Although I started my career in small businesses, I spent most of my working life with Fortune 1000 brands. I left the big business world five years ago (after achieving a “C”-level position) and started my own marketing consulting and business development firm. Here is some guidance, based on what I’ve experienced and observed. Get to Know the Business Entrench yourself in the day-to-day operations of your friend’s business. Understand the history of the business, its financials, its customer profile and its competitors. Talk to the people who work at the company and interview customers. Unlike big business, where marketers rely on focus groups, market research and CFO summaries and analysis, small business marketing requires a very hands-on and intimate approach. If you are starting a business, look to other similar businesses and products for “gaps” — talk to prospects (at conferences or networking events or via phone) to better understand what needs are not currently being met. It will help you refine your product, service and messaging. If you are learning a new industry, read as much as you can about that category. And “downsize” your reading list: Subscribe to e-zines, blogs and print publications that relate to small business marketing and management specifically. Budget permitting, attend an industry conference. Summarize everything you discover about your friend’s business — background, financial picture, competitive arena and opportunities and risks. But resist the urge to issue a 100-page report or PowerPoint deck. Instead, capture it all in a five-page bulleted summary. In the small business world, no one has time to read, analyze and pontificate. Cut out the fat and focus on the facts. Review your findings with your friend and other key team members. If this phase is done well, you’ll be bringing new insights and an objective perspective to the company, elements that may not have previously surfaced because your “client” has been too close to the day-to-day demands of running his business. All that said, keep in mind that small businesses, like big businesses, cannot put a hold on their day-to-day activities while embarking on planning and analysis exercises. Make sure you understand what needs to be happening short-term to keep the business moving while you develop longer-term plans. The Basics of Marketing Still Apply Small businesses don’t have the budget or time for complex branding exercises and multimillion-dollar marketing campaigns. That said, the basic principles of good marketing still apply. 1. Create an integrated, living, breathing marketing plan. This is essential when budgets are limited. Very clearly and specifically map out how you plan to spend every marketing dollar, and set payback targets. Review and reforecast monthly, but be patient and allow sufficient time to read and analyze results. 2. Develop a clear, competitive, consistent positioning and a professional graphic identity. Work on developing language and a look that everyone can embrace. Many freelance graphic designers are also “corporate drop-outs” and can knock out great, fast branding work cost-effectively. 3. Match the tactic to the budget. Big businesses can often afford a marketing plan that includes a brand advertising campaign, a full-scale direct mail program, customer events and trade show presence, Web marketing efforts and a full-scale PR launch. You may find yourself in a position where you need to pick and choose, or pace your spending to follow the business growth curve. That said, marketing works best when it’s fully integrated. For example, an effective Web, PR and networking campaign may deliver the same results as traditional advertising and can be well executed without a huge spend. 4. Be nimble and creative in stretching every dollar. Look at every single aspect of your marketing plan and brainstorm ways to get more for less. When buying third-party services, always ask yourself, “Is there a less expensive way for me to still get great-quality work?” Research is important but can be conducted online or via phone interviews. Shop around for competitive pricing on services like printing. 5. Build alliances. Small businesses become very dependent on one another for mutual opportunities to grow business. Develop a networking and outreach plan to align yourself with key strategic partners who can bring you new leads and new solutions. As long as they are not in a competitive company, small business marketers and other business owners can be very generous with their ideas and suggestions. 6. Get your hands dirty — very dirty. Many big brand marketers are used to having teams of people around them — agencies, researchers, purchasing departments, IT gurus — who help them “get it done.” In the small business world, you are it! So, take off the white gloves and delve in with both hands (and feet). Even if you once thought that reviewing proofs for a printed piece or conducting outbound telemarketing was “beneath you,” you’ll find that it’s the best, fastest, and most cost-effective way to get things done in the small business world. Setting Marketing Investment Priorities Unlike large businesses, where extra marketing dollars can often be “found” somewhere (in another project or another department), small businesses have no “magic stash” of extra marketing money. Establish a budget that makes sense for the size of the company, and then go through the exercise of figuring out what you would cut first if you needed to scale back. Conversely, determine how you would spend 10% more if you had the funds, and figure out what the upside of that investment could be. Discuss these spending scenarios with your friend. If the business is faced with competitive pressure or is launching a new product/service, taking a calculated marketing risk could be an important step in building the business. Define Your Role Within the Company As in any business — large or small — the role of a marketer is not just to develop the brand and plan and execute programs to drive new business. The marketing leader must also act as the “voice of the customer,” the visionary, the cheerleader, the risk-taker and the analyzer. And every business — whether it’s one person or a million people — needs that marketing force within it. You’re just doing it with a smaller budget now. Nancy A. Shenker is founder & Principal of theONswitch, a marketing consulting company specializing in start-ups, launches, and transformations across many industries, including health/wellness, real estate, education/kids, and retail. She can be reached at www.theonswitch.com. March 2008 What are the legal and tax implications for business owners opening a satellite office outside the metro area? Are some states friendlier than others to small businesses? The good news: Your business is growing and you want to open satellite offices in other parts of the country. The bad news: Your tax and legal situation will get a whole lot more complex.
Also determine your obligation to collect sales tax on goods and services sold in your new state. Again, you’ll need to obtain a resale number (sales tax certificate) in the new state and set up your systems to enable sales tax collections and remissions to that state.
You’ll need to file tax returns in the new state, where required, and apportion income to that state. Contact the state’s revenue department for details on sales tax and income tax obligations. If the business is a pass-through entity (e.g., S corporation or limited liability company), owners will have to file personal income tax returns in the new state as well (if the state has an income tax). Each state has its own rules on how to allocate income; they usually use factors such as payroll, assets and sales to make the allocation. It’s wise to work closely with a CPA for this purpose.
When soliciting big companies, how do you create a proposal that works?Usually the first step is we receive requests for information (RFIs) with cover letters that say, “We are sending this RFI to 100 promotional products companies.” And you’re thinking “I’m competing against 100 companies, I can never win this contract!” Don’t think that way, because out of the hundred, only about 25 will then fill out the RFI. Then the RFP (request for proposal) comes out and it’s daunting; it’s thick. They want all your financial information; it’s very challenging. But if you think it’s the right fit for your organization and you can give them huge value, then go for it.
I am helping a friend set up a new business that services and supports residential and commercial PCs in Lower Westchester. I will be helping him with the sales and marketing, operations and general administration. As you can imagine, we are operating on a small budget. My background is in sales and marketing at Fortune 500 companies, so all this end-user detail is new to me. How do I take what I know about marketing and apply it to a small business? Your question is a common one. I’ve encountered so many professionals who come from the large corporate world and are suddenly plunged into the realm of small business operations and marketing. Only savvy, thrifty, pragmatic and flexible people survive the transition.
- Anonymous
When an employee is negative, it’s a real drag. But more than that, it actually affects your business results because it’s stealing time from the company and bringing other people down. A CEO has to say, “This is not OK.” Our team is here to deliver business results and when behavior is detracting from that, it’s a big problem.
Before you decide what course of action to take, you need to make the time to ask yourself a series of questions:
What do you, as a CEO or leader, value the most?
Is it results and/or revenue generation above everything else? How much do you value good behavior? That is a choice a CEO makes. Some companies will tolerate abrasive behavior because profit generation is the most important thing.
How valuable is this person?
Perhaps this individual is bringing in 30% of sales or closing important deals or keeping key accounts other people couldn’t handle as well. Can you isolate him somehow so that he doesn’t affect other people in your business? On the other hand, if the person is causing turnover because of his aggressive behavior and causing other people to be less productive or efficient, you need to look at your options.
Can he change?
If you think the answer is yes and you’d like this employee to stay with the company, then you need to have a frank conversation with him. Be clear and direct about the problem. This behavior is not OK, and this specifically is what has to change.
Get the person’s manager to coach him, or hire a coach from the outside. Ask the employee, how can I help you succeed in changing your behavior? What do you think stands in the way of your changing? What changes and commitments will you make? Write down what you both agree on and decide when you’re going to meet next to follow up.
If you think the person is a mediocre worker and you are not sure if change is possible, then it’s time to give him a clear written warning. Say exactly what needs to change and let him know that if he doesn’t improve, he will be terminated. Don’t make the mistake of saying too much. If there’s a chance you’re going to be firing this person, check with your HR person or attorney about potential legal issues on the horizon.
Finally, if you’ve concluded that the person doesn’t have the capacity to change or is not valuable, you need to terminate his employment. Consult with your HR person and legal counsel about what you should and should not say. If you say too much, or say the wrong thing, you could be inviting trouble, so script yourself and stick to the script.
In any of these scenarios, be sure not to fall into the trap of trying to broker a personality confl ict between employees. There is an epidemic of whining today, and listening to it is not where you, the CEO, want to be spending your time. Use that time instead to get out there and develop new business could translate into millions for the company.
The Hardest Decision for a Small-Biz CEO
For many CEOs I work with, a thorny issue is that of the key employee who has a strong connection with the company — perhaps he was a founder, or is a close friend or a relative — but is no longer an important contributor. It can take a year or longer to face what’s happening and do something about it. There is so much pain involved in dragging this out — and huge lost revenues and profits. Imagine what a star performer could do with a position that is now occupied by a mediocre or problem employee.
Leaders today can’t afford to tolerate mediocrity. In a difficult economy, mediocrity can be the kiss of death for a company. Having high-performing, positive and creative employees is essential at any time, and particularly during a recession.
In my 40-plus years as a management coach, I have never yet heard a CEO or manager say, “I’m sorry I let that person go.” By the time they take that action, it’s usually long overdue — and the other employees are saying, “Thank God!”
Norma V. Rosenberg is a CEO coach and advisor on implementing business strategy. She is a chair with Vistage International and was formerly director of international strategy with PricewaterhouseCoopers. She can be reached at NRosenberg@NVRconsulting.com.
February 2008
How do I determine which marketing tools are right for my business?
- Anonymous
This is one of the most commonly asked questions, and the not-so-surprising answer is: There’s no easy answer. Every business, even within the same industry, needs a unique solution. However, if you follow the steps outlined here, the result will be a media strategy and a plan that works. And isn’t that what marketing is all about?
Ask the Big Question: Most small business owners take an ad hoc approach to figuring out what tactics to use. For instance, a local media representative (who is focused on increasing his or her revenue by selling advertising) pays you a visit. He or she will show you your competitor’s ad, emphasizing the positive results — and hoping your reaction will be, “Well, if they’re in it, shouldn’t I be?” The better question to ask yourself is, “Does my customer look at, read and/or listen to this marketing method?”
If you simply copy the competition, you are tacitly acknowledging that your competitors know more than you. Chances are they don’t.
Get to know your customer. Choosing the right marketing methods or media starts with a basic question: Who are your customers? What do they like to do? What do they read, listen to and watch? What websites do they visit? Do they belong to any networking groups? Associations?
So how do you get this information? Well, the most inexpensive and efficient way is to ask. Engage your best customers in a casual conversation, asking some of the questions above. If they like doing business with you, they will be more than happy to talk with you.
Get specific about what you want. Now that you know some of your customers’ interests and behaviors, the next step is to decide what you need to do to grow your business. Do you need more leads for your sales channel? Should the leads be more qualified? Is your business suffering from a lack of awareness? Do you want to penetrate new markets or expand existing ones? Making your goals clear and quantifiable will help the process of making tactical decisions. It’s not good enough to say, “I want to increase sales.” It’s better to say, “I want to increase sales 20% by acquiring new customers from the (fill in the name) marketplace.” That’s a quantifiable goal.
Make a media list. Your informal surveys will have started you on the path to marketing ROI. Your customers have told you what they do, see and hear, and you have developed a clear idea of what you need to do. Now it’s up to you to find the appropriate tactics to reach your objectives.
The next step in this process is to create a list of all the marketing tactics and media available to you with which your target market (potential customers) engages. Don’t evaluate the list for cost or reach at this point. The list can be long (it usually is). That’s OK.
Set a realistic budget. Now comes the hard part: establishing a budget and making tactical selections. Even the most profitable small and medium-size businesses usually can’t afford to pay for every available media outlet.
Most companies spend anywhere from 2% to 10% of their gross revenue on marketing. The higher percentage is more likely to be spent by a consumer goods company and the lower end is more likely to be spent by a B-to-B organization.
In order to find out what percentage is right for your business, use your goals as a starting point and work backward. Here’s a very simplified example:
Your goal is to grow your business by 20%. By evaluating the sales of an average client you find that you need 100 new clients to reach your goal. In your previous experience you have found that each mailing you do generates two new customers. Therefore you will need to do 50 mailings to achieve your goal. Does that sound unreasonable?
If it does, you need to back up and readjust your goals. How much growth do you want? How much can you handle? Yes, this creates more work, but it also establishes realistic goals and budgets and addresses capacity issues æ a critical area that is often overlooked.
Choose your tactic. There is one thought I want you to have while making marketing choices: Use as many different methods as possible. The more customer touch points, the more effective your whole marketing campaign will be. To help you along this path, I’ve put media into two categories that address some of the common objectives desired by small businesses.
Get the timing right. Every business has cycles. Whatever the reason, business volume will vary due to conditions that are usually out of your control. Therefore marketing dollars have to be spent on the appropriate tactic at the right time.
Most organizations look at the sales curves and try to increase sales during the slow times. However, spending your hard-earned dollars on marketing to prospects during the slow period is a fool’s errand. There is a reason customers are not buying, and to convince them otherwise is like trying to sell ice to an Eskimo. Better to time the expenditure of marketing dollars to that interval when the sales curve starts to rise. This is what I call the marketing aperture, the time when prospects and customers start to think about buying your stuff. It is 10 times more effective to advertise within this time period than any other.
In conclusion, marketing is not rocket science — but it does require focused effort and some due diligence. It will all be worth it when you start to see positive results.
Mitchell E. Tobol is president of Tobol Group, Inc., a Port Washington, N.Y.-based marketing, advertising, and public relations firm that works with small regional businesses as well as Fortune 500 companies. For more information, contact him at MT@tobolgroup.com.
Like most small business owners, I find there aren’t enough hours in the day to accomplish all I want to do. Plus there is another, growing demand on my time — people who call me and e-mail me asking for my advice, help, etc. I feel that as a growing business, I need to get back to anyone who communicates with me, and I am aware that these contacts may provide some opportunities for my company. But the sheer volume is beginning to bog me down. Do I owe a response to everyone who contacts me? If so, how do I handle it all?
Anonymous
I have been a business owner for over 13 years, and a week does not go by without someone calling or e-mailing me to “pick my brain” (a phrase that, by the way, I detest). While I always believe in the courtesy of responding to everyone, I am also a stickler for time management. Here is how I handle my inquiries:
When someone calls, I immediately say, “I have five minutes: how can I help you?” As the caller starts to tell his story, I stop him or her and say, “Would you mind writing down your specific questions and let me know what you have done so far to seek a solution? Then, please e-mail them to me, in bulleted form, so that we can arrange a follow-up meeting or phone call. This way, I’ll be prepared and we can get right to the matter.” Here is the funny thing: About 5% of the people actually follow up. I have found that while many people say they want your advice, time and suggestions, they will never act on what you say — so I find out in advance by asking them to meet me halfway. The ones that are serious about soliciting my advice or opinion will follow through.
With an e-mail inquiry, I will basically give the same sort of reply. Like many people, I carry a BlackBerry and I will glance at my e-mails all day long. But for the sake of time management, I often wait to answer them all at once, when I have a mini-block of time.
To keep things under control, it’s also crucial to batch these kinds of calls by category and importance. Don’t stop and start on each inquiry that comes in without finishing your prior work. You will only get more bogged down.
A caveat here: If during the first few minutes of the phone call, or if in reading the initial e-mail, I know I cannot help this individual or provide useful advice, I immediately say so; if possible, I may refer him or her to someone else. The last thing I want to do is waste time figuring out “some way” to help someone when I know that ultimately I won’t be able to.
Regardless of who calls, always take those few minutes to listen carefully and be courteous. Be firm, stick to your time limit, and remind them that you can talk to them at a later date, when you have blocked out the time. Let people know that your time is valuable and help them get to the point. I’ve made some great connections and contacts through lending a helping hand, and I firmly believe that what goes around does come around. You just have to set up your rules so that your helping hand remains just that and you can get on with the business of running your business.
Andrea R. Nierenberg is an author, speaker, consultant and the president of The Nierenberg Group, a business consulting firm based in New York. For more information, please visit selfmarketing.com.
