We have asked a range of sales and marketing experts and entrepreneurs to help solve some common problems that may still be confronting business owners.
Problem: Customers are crying out for discounts.
Solution: Don’t drop your prices – find another way to get them over the line.
Marketing guru and SmartCompany blogger Colin Benjamin says there is a big problem with discounting – once your drop your prices, it is nearly impossible to raise them again.
Luke Bayliss, co-founder of Sumo Salad, agrees. “We are preferably not discounting because that has a negative impact on the business as a whole. Particularly during the global financial crisis, people may respond well to those in the short term, but they cause long-term damage.”
Benjamin says companies must find other ways to persuade customers to buy, mainly through offering improved service. Offer customers better terms of trade (by giving them longer to pay), offer priority delivery or think about giving them a little gift with every purchase.
“The key is to try and get more revenue out of each customer,” Benjamin says.
Problem: Two our sales people are doing well, but the other eight are struggling.
Solution: Get the stars to teach the laggards.
Trent Leyshan, managing director of sales consultancy Boom Sales, admits the sales environment can be cut-throat and sales people can be very protective of their intellectual property – that is, their sales methods. But he says that good companies need to break down these barriers and forces top sales people to share ideas.
“A lot of sales models can be very competitive, and sales people can operate in their own silos. To me that’s counter-intuitive to a business that is genuine about doing the best by its customers.”
He suggests getting all sales people together for a brainstorming session to create a sales process that everyone can do. Naturally, this should be led by your sales stars, who will hopefully pass on tips and advice to help other members of their group start climbing towards their level.
Problem: I don’t know what my sales process should look like.
Solution: Develop strategies to win, keep and grow accounts.
Rob Hartnett, sales coach and founder of consultancy Selling Strategies, says that the sales cycle (from lead generation through to client management) generally stretches out when the economy slows as customers guard their cash, and it is during these times that a robust sales process becomes crucial.
He says a sales process really needs to have three phases – a sales process for creating an opportunity; a sales process for managing opportunities; and a sales process for retaining and growing accounts won.
“A down economy is a good time to review your sales process to improve its effectiveness,” Hartnett says.
Problem: We haven’t really had to sell for five years.
Solution: Make every employee part of the selling process.
Trent Leyshan was recently approached by an engineering firm that had a big problem – no-one in the organisation actually knew how to sell. They could work on tenders, they could manage projects, but the business just hadn’t needed to be sales focused in the past. Now they needed help.
Leyshan concentrated on getting the firm’s top management to understand the importance of putting sales at the centre of the firm’s strategy and to demonstrate that everyone in the firm had a role in selling, from the admin staff to the accountants to the project managers. “It’s about getting everybody and the same page and getting everyone to understand how they engage customers.”
Problem: Customers don’t seem to “get” what we do.
Solution: Develop a clear sales message.
Sue Barrett, head of sales consulting group Barrett, says that businesses must give a clear, concise message of what exactly their business does before they can even think of making a sale.
“My basic solution is that you need to have a clear marketing message of intent. What do you do? How do people understand what you do? You need to sell the right way and to do that you need to ask what it is exactly that you do for people.”
“Being pro-active and talking to people is great, but if you’re not clear about what you do then they’re not going to understand.”
Problem: Where do I start with sales and marketing planning?
Solution: Get your sales targets clear.
Barrett says that companies cannot afford to be complacent in a downturn and must figure out a plan to survive, and part of that strategy involves setting clear sales targets.
“Look at the numbers to decide what you have to do. If you need X amount of revenue, then look at what your average sale is, and out of that ask how many sales you need to make each year, how many prospects do you need to talk to for sales and ask how many people you need to contact,” she says.
“A lot of people rely on websites and such, which is nice but they in themselves do not make you a sale. They keep your brand out there, but you have to pro-actively put yourself out in the market.
“You need to look at details. Know what markets you need to be targeting. Who do you need to be in front of, and how often do you need to do that?”
Problem: I need leads.
Solution: Work your database.
Debra Templar of retail services firm The Templar Group says the downturn is a good opportunity to work your database and contact those on your database who have served you well.
“Remind them that you exist. Fill them in on any new products or services you’re offering. I recently had a marriage celebrant decide she was going to re-contact her former customers… Not only on the off-chance they may need her services again but because they most likely could have friends and associates who might need her services.”
A bit of database pruning doesn’t go astray, too.
“Get rid of the dead wood and work hard on satisfying the needs of your top 20% of customers (most likely they’re giving you 80% of your business),” Templar says.
“Too many times we run around chasing new business and we forget about the ‘gold’ sitting in our databases. We assume our top customers will always be loyal and we forget to reward them for having got us where we are. They’ve brought us to the party; the least we can do is dance with them.”
Problem: I’ve got no money for sales staff incentives.
Solution: Find other ways to reward your top performers.
Structuring incentives for your sales people is not easy, particularly in difficult economic times when the bonus pool is looking decidedly shallow. Colin Benjamin says that the obvious strategy is to move towards short-term sales commissions, but he says this can create a competitive and poisonous environment among your sales team and can lead businesses to focus too much on the short term.
His solution is to use non-financial rewards in the short term, such as flexible working arrangements or time off for a special occasion. Then, depending on whether sales targets have been made, sales staff should get financial bonuses at the end of the year.
Problem: My company can’t afford to carry inventory.
Solution: Use the 80/20 rule.
Organisations that were selling out of inventory in the boom have found themselves with a problem – to free up working capital, there has been a need to run down inventory levels. Of course, this creates another problem – selling stuff that you don’t have is a good way to annoy customers.
Benjamin says it’s time to employ what he calls the 80/20 rule. Concentrate on the 20% of your products that bring in 80% of your revenue and make sure that you always have these products in stock. You should be able to run down inventory levels across the rest of your range.
Problem: Where should I aim my marketing campaign?
Solution: Narrow your focus with micro marketing.
Brian Walker, principal and founder of retail consultancy The Retail Doctor, says the days of the mass marketing campaign is fast diminishing. For example, sending a catalogue or flyer to every home in your area just won’t work – instead, you need to target your marketing to the people who you know are actually interested in your product.
He suggests any such campaign will need to be multi-disciplined; online, direct email marketing, and advertisements in appropriate media. A campaign based around a loyalty or rewards type program can be particularly effective, as you can be certain you are targeting those customers who want your goods.
“It’s about protecting the margin as best you can,” Walker says. “Think of ways of giving them a reason to come to you.”
Problem: How do I make sure my marketing gets people buying?
Solution: Call your customers to action.
Luke Bayliss from Sumo Salad says that companies need to focus on marketing that will deliver them a solid return on investment.
“In these times you’ve got be careful where you spend your money. It’s easy to not get a return on your investment and effectively waste your money, which is what you don’t want to do right now when you’re trying to stockpile cash,” Bayliss says.
“We’re focused on return-on-investment type marketing, call-to-action type marketing messages that drive the revenue of the business.
“Call-to-action is something that gives consumers a specific reason to buy. Not necessarily a discount, but points of differentiation like a special flavour for the month, or a new product. Simply from a marketing perspective, it’s just about being pro-active and getting out there.”
Problem: It’s expensive to buy media space for marketing.
Solution: Negotiate with media buyers and grab a bargain.
During a downturn, many businesses are making decisions based on fear that the economy will continue to deteriorate. But Chad Polley, marketing manager for video games retailer GameTraders, says that businesses should do all they can to communicate with ad agencies to pick up good deals while the time is right.
“With the decrease in advertising spend across the country, media buying costs are coming down and there are some great deals to be had,” Polley says. “During tough times consumers are more conscious of value and tend to spend more time at home, and TV spend can become increasingly effective.
“Cement relationships with your media partners and advertising agencies, work with them for mutual benefit. If their business doesn’t survive, you will be forced to find new partners, which could take significant time to get them up to speed.”
Problem: How will I know if my marketing campaign is getting a good result?
Solution: Measure, measure, measure.
Researching your customers may seem boring, but Debra Templar says it is the only way you’ll start making progress in the downturn.
“You’ve just run an ad and an additional 100 people have come through the door on day 1 of the ad. Your marketing has worked – irrespective as to whether or not they have bought your product/service. You could easily have 100 people through the door and sell to one of them,” she says.
“You don’t have a marketing problem, you have a selling problem. Before you run the ad again, you’d better get up to speed with sales techniques, otherwise you’re going to get the same results again and again. The marketing worked, you and/or staff didn’t.
“The flip side of this is when you have 10 people come through the door and you sell to eight of them. There’s nothing wrong with your sales and service skills – but the marketing wasn’t the most successful. Measure, measure, measure – so you know where to put your future marketing spend.”
Problem: There are not enough customers for my store.
Solution: Learn how sell to the ones you get.
Retail expert Brian Walker hates it when downturn-hit clients tell him the reason they are struggling is a lack of customers.
“There’s no shortage of customers, you’re just not selling to them.” He says that on average just 20% to 25% of people who walk into a store actually buy anything, and 60% of transactions have no add-on component. Improve these ratios, he says, and you’ll quickly solve the problem of falling sales.
Walker says retailers should concentrate on pouring sales training into their staff to improve their product knowledge. Shop layout and ambience (music, lighting, décor) is important and stock management is crucial. “You can’t sell what you don’t have,” Walker says.
He also suggests emphasising those little extra things you do, such as a clothing shop that offers an alteration service.
Problem: My sales pitch just isn’t working.
Solution: Understand the difference between a customer’s need and their decision-making process.
Adrian McFedries, managing director of franchise consultancy firm DC Strategy, says that too many businesses spend too much trying to sell a product while ignoring how a customer thinks before they buy it.
“Between 70% to 80% of businesses don’t understand the difference between a customer’s need and their decision-making process – that’s the most important aspect of selling; full stop,” he says.
“How many times have you had a salesman ask you, ‘What’s important to you when you buy?’ They just crap on about functions and features and price, but don’t really ask what is important.”
Taking the example of a mobile phone, McFedries says too many companies will try and sell a broad concept – the phone itself – without addressing the specific customer needs, such as USB connectivity, wireless functions, etc.
“Remember that a customer doesn’t always know what they want. More important is the process by which they make a decision. Your fundamental need may be a phone – that’s not rocket science – but the process by which they decide which phone is the key to your sales strategy.”
Problem: I’m spending too long dealing with customers who never buy.
Solution: Win fast and walk quickly.
Rob Hartnett says timing everything right now. “The economy is very patchy at present. Not only are some industries affected by the economy more than others, there are many organisations that are being more affected than others.”
Sales people must work out who to stick with, and when to move on.
“So you must work with active prospects who are buying and leave those prospects who are negative or shrinking to another time. That is not to say abandon them, just focus on the active accounts that are buying.”
Problem: We’re only attracting rats and mice, not big customers.
Solution: Identify your most profitable customers.
During a downturn, business owners may become so desperate for sales that they throw themselves at anyone who comes along. But Adrian McFedries says this isn’t the right approach.
“Clearly at the moment the key topic for businesses is cashflow. Businesses in this environment have a set cost base, so they have to do what they can with sales. What they need to do is look at their existing customer base.
“So don’t spend too much time on customers that aren’t profitable,” he says.
“Identify the most profitable customers and remember that not all customers are created equal. A lot of customers are unprofitable, and others are a pain in the arse, but you need to spend time on the painful ones and not ignore them because they may the most profitable.”
Problem: My customers aren’t coming back.
Solution: Give them a reason.
When customers are strapped for cash, it’s no surprise they often won’t return to favourite destinations, but Paul Greenberg, co-founder of online retail warehouse Deals Direct, says that you need to give them a reason.
“The best aphrodisiac for a new sale is an existing sale. It sounds obvious, but we hadn’t done it, so now we put an offer on the sale that provides an incentive or deal on the next order.
“So in many ways I see a parcel going out as an opportunity to get another sale. The logic is simple – you’ve got a parcel in super quick time, and you think it’s great, and then when you give them something extra it only helps your business.”
Problem: Should I start selling in a new area?
Solution: No. This is not the time to experiment.
Many businesses see expanding their product range as way to survive the downturn, but some experts are saying now isn’t the right time to be experimenting with your core business.
Chad Polley at GameTraders says that businesses should have a clear focus and shouldn’t divert from a business plan.
“It all comes down to strategy and what you achieve. We focus on the most profitable areas of our business. Continue working on areas of profitability, focus on your core business, and don’t focus on anything new and experimental.
“There’s always going to be times to take risks, and we do, but we’re focusing on the fundamentals at the moment, and that’s where we stand.”
Problem: I am worried about getting through this downturn.
Solution: Remember – basic principles hold true, whatever the environment.
Small businesses may be tempted to change their strategy in a downturn, feeling pressured by ominous economic forecasts and fewer people walking in the doors.
But Richard Uechtritz, chief executive of JB Hi-Fi, says that businesses shouldn’t be scared into changing their marketing plans if they are already experiencing success.
“The basics of retailing, sales and marketing are the same in a downturn. People think you retail differently in many aspects. I see it all the time. People say “we’re retailing for the downturn” – there’s no such thing. Retail principles hold true whether it’s in good times or bad times.
“There is no difference whatsoever.”