Most people jump to this stage of the process first. This is the equivalent of placing a first order of 100,000 widgets based on a design on the back of a napkin. Yes, there's a chance they might do the job but you're risking losing a lot of money in the process. (Read 'Turning your marketing upside down' for a more detailed explanation)
First, you need a robust marketing function in your business that leads your customers comfortably through their buying process. You need to make sure you've designed your marketing to be effective and you've tested it out and are confident that it is converting customers with a good return on investment.
The process of doing this will almost always result in an upturn in sales, but if your sights are set higher and you want to grow your business more, you have two choices:
The order of these is important: it is far easier and more efficient to increase sales from existing, proven marketing activities. People often shy away from doing this because they're not confident their activities are delivering ROI. If that's the case, go back and put measures in place so you know whether they're working or not.
What is the difference between cost-based pricing and value-based pricing?
Cost-based pricing is a model where you work out how much a product or service costs to deliver and set your price accordingly. As long as you factor in all your overheads and sales & marketing costs, you will be able to work out your profit margin.
Value-based pricing is a very different model, and people often struggle to get their heads round it, so I use this story to explain what it means...
In my last blog ("What's the point of marketing?") I discussed how the first step in engineering a new product is to establish its purpose. In marketing it's the same, you need to establish the purpose of your marketing and how it needs to support your customers at every stage of their buying decision.
Once you've done that, you need to define your specification.
An engineering specification or functional design specification will typically include everything you want the product to do, how it should work, how it should be manufactured, timescales, cost restrictions and any other pertinent requirements.
In my last blog, I used the example of designing a keyboard. In this scenario, I'd need my specification to describe...
It's always tempting to sidestep this phase or start with a rough outline of what you want to achieve, However, the consequences of this approach can be costly.
Every new product, software, system or process must have a purpose. It must solve a problem or else it has no value and no one will buy it. By deeply understanding the problem your product solves for your customers, you can stay focused on what features will deliver the most value.
For example, if I was designing a new computer keyboard, I would need to consider...
Likewise, you must always stay focused on your marketing's purpose.
I always say that creating a marketing wish-list is easy – it's prioritising it that's the hard part. That's why I use the Watertight Marketing methodology with many of my clients. It's a logical and structured approach to prioritising your marketing activities to get the best return on your investment.
Using this approach, you "traffic-light" the "leaks" in your marketing processes and address the red leaks first, in the right order.
But it's not a once-and-you're-done activity.
I recommend clients review their leaks every six months or so, to stay focused on their priorities and on track to achieve their long-term goals.
As you might imagine, after working on addressing a red leak in your business, hopefully it will turn orange and then eventually green. However, that doesn't always happen. Why? Because you are working towards a constantly moving goal-post.
Most people who aren't marketers think of marketing as "getting your name out there". That if you want more customers, then you just need to tell more people about your product or service.
This assumes two things:
1. That as soon as people hear about you, they'll just "get it" and immediately understand the benefits of your product.
2. That the decision to buy is an easy one that doesn't involve too much thought.
If you sell an impulse-buy, like cupcakes, chocolate bars or jewellery, those assumptions are probably correct. So a marketing strategy that focuses on promotion (or "getting your name out there") is probably correct.
However, for most businesses I work with, at least one of these assumptions is wrong.
How long does it take to buy from you?
This sounds like an easy question. But, it actually has 3 different answers depending on what you want to do with the information.
You might be talking about elapsed time, accrued time or your welcome window. Here's the meaning of each time-period and when you should use it in your marketing strategy.
When I start working with a client, one of the first questions I ask is "who is your ideal customer?" How specific the answer is varies a lot, but from a short conversation I can usually assess whether they understand their customers well enough.
What do I mean by "well enough"? Well, if you don't understand your customers very well then it's unlikely that your marketing will resonate with them. You'll probably end up taking a "scatter-gun" approach to marketing and wasting a lot of time and money in the process. My blog "Do I need a customer avatar?" explains more.
So how do you know whether you understand your customers enough to effectively market to them? Here are the signs I look out for...
Last month, on the final day of the Olympic track cycling competition, Team GB Performance Director Dave Brailsford explained the "marginal gains" strategy that had proven to be the secret to Team GB's success.
He said, "The whole principle came from the idea that if you broke down everything you could think of that goes into riding a bike, and then improved it by 1%, you will get a significant increase when you put them all together." (BBC News)
He explained one of the first things he taught the team was how to wash their hands. They were all instructed to spend an extra 5 seconds washing their hands every time they did this, and he estimated that those 5 seconds per hand-wash, over the course of 4 years, gave them an extra 5 days of training by reducing infections. Those 5 extra days of training might have given the team a gain of a few microseconds on the track. And at Olympic level, those microseconds can make all the difference.
I couldn't help but think of the parallels of this in marketing.
If you want to increase your sales, the obvious answer is to tell more people about your product or service. Isn’t it?
Well actually, logically, that’s the last thing you should do.
As business owners, it’s almost instinctive: more sales has to come from more prospects, they come from more leads and they come from more enquiries. So that’s where I need to start.
And if all of your enquiries eventually convert into customers then, yes, that is all you’d need to do. But lets face it, our “sales funnels” are not really funnels. If only they were!
If you are spending money on promotion, but you are losing customers further down the buying process, then you are wasting money.
And if, like most businesses, you’ve got leaks at a number of different points in your funnel then where do you start?
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