TABLE OF CONTENTS
INTRODUCTION
Waste #1: Failure to define marketing correctly and not identifying Marketing assets already in the business.
Waste #2: Failure to execute marketing inside before going outside!
Waste #3: Failure to build a marketing plan around the THREE WAYS TO GROW!
Waste #4: Failure to have a USP - Unique Selling Proposition
Waste #5: Failure to communicate and integrate the USP - on-going sales training
Waste #6: Failure to understand the Lifetime Value of a Customer
Waste #7: Failure to make advertising Direct Response
Waste #8: Failure to leverage relationships: Inside and outside the business
Waste #9 Failure to implement Direct Marketing
Waste #10: Failure to start marketing on the Web
CONCLUSION
INTRODUCTION:
Lean Marketing Follows the Lean Manufacturing Example
For
many years, manufacturing companies have been working to get their
employees trained in "lean" manufacturing techniques. These techniques
primarily target areas of waste in a manufacturer's operations,
processes, equipment and labor. The objective is to eliminate waste and
make the operations, processes, equipment and labor more efficient. By
doing so, cash flow can improve because a company will be much better at
delivering products to the customer when the customer wants it. No
sooner, no later. There is less inventory on hand because the company
has learned how to produce the right number of products and do so in a
more efficient manner. Many times the cost of production, equipment and
labor can be reduced to increase the bottom line for a company.
Equipment is more efficient so a company's return on equipment
investment increases. The company wins and customers win with lean
manufacturing.
This success in lean manufacturing is now moving
into the area of "lean" office and "lean" healthcare. Other industries
are adopting many of these "lean" techniques to lower costs and be more
competitive in today's world.
These same "lean" concepts can be
applied to marketing. We are unique in introducing these "lean"
techniques into the "top" line operations, processes, marketing
resources (marketing equipment) and staff of a company. Our system seeks
to eliminate waste and inefficiencies in all the marketing and sales or
"top" line processes. Instead of "bottom" line cost savings, there are
"top" line revenue increases which results in more profit or increased
"bottom" line.
In other words - lean marketing and sales.
Business Owner Frustrations
The
traditional definition of marketing has been the introduction of your
company's products and services to prospective customers. By reason of
this definition, business owners have pursued the "traditional" avenues
of marketing. These include: Advertising, hiring more salespeople,
prospecting, direct mail, referral programs, web marketing and many
more.
All of these traditional marketing methods can work - but
many times they don't (Don't create a paying customer) and this leaves
business owners frustrated. Sometimes they have invested thousands of
dollars in these traditional methods only to find out they didn't work
or that in order to really work, they need to invest thousands more.
The
business owners then go back to the providers of these traditional
marketing methods and ask for accountability. The reply is usually
something like this:
"Did the (marketing method) bring in more
prospects?" "Yes, but they didn't buy anything." says the business
owner. "Well, if they don't become paying customers, we can't control
that - that is your responsibility" is the reply.
In other words
traditional marketing method providers are not paid and do not concern
themselves with what happens after a prospect is generated. Indeed there
may be plenty of new prospects generated, but if they don't become
customers, it hasn't helped the business owner! And, the frustration
only grows.
Waste #1: Failure to define marketing correctly and not identifying Marketing assets already in the business.
The
frustration grows partly because the definition of marketing is
short-sided and inadequate. It is time for a new one. A new one for the
21st Century!
We have redefined marketing to be:
The
introduction AND SELLING of your company's products and services to
PAST, PRESENT AND PROSPECTIVE customers by first optimizing and
leveraging ALL of your company's marketing assets.
With this new
definition, marketing becomes concerned with what happens after a new
prospect is contacted or inquires. If a business owner does not track
and understand what is happening to a prospect immediately upon contact
or inquiring, waste enters in.
There may be waste in that the
right qualifying questions are not being asked, so salespeople spend
time with the wrong prospects. Waste. It may be that whoever is
answering the phone or greeting the prospect is not saying the right
things. Waste. It may be that the prospect isn't ready to buy right now
but might be later. The company is not tracking this relationship and
the prospect goes away. Waste.
Then, if a prospect does become a
customer and is ignored or not included in the company marketing efforts
in an on-going basis, then the customer will not buy as much as they
could. Waste. And, if there is not good customer service and the
customer leaves the company there is more waste. It is ten times as
costly to get a new customer than to keep one.
To eliminate this waste required an acceptance of a new marketing definition.
Too
many companies separate sales and marketing. Many times the two
departments don't even talk to each other. Waste. Selling is and always
should be under the umbrella of marketing. Don't separate the two. That
creates waste.
IDENTIFYING MARKETING ASSETS
Because of the
inadequate definition of marketing that has prevailed, business owners
think of marketing assets as only their advertising or the accumulation
of new prospects and new customers. This is a very short-sided view of
marketing assets - a waste.
You can find a list of marketing
assets on our website, blog, and in other articles we have written.
These include past customers, current customers, salespeople, the
company's advertising, referral programs, current sales and marketing
processes, location, reputation, time in business, relationships with
other businesses, etc. It is very important for business owners to "see"
all of these as marketing assets. Not just those that create new
prospects.
If a business owner will begin "look" at marketing in a
different way - accepting the new definition, then they will begin to
eliminate the wastes that occur under the traditional definition and
find new sales and profits waiting for them.
Waste #2: Failure to execute marketing inside before going outside!
The
traditional definition of marketing as discussed has forced business
owners to always be looking OUTSIDE their business for growth.
What
I mean by "outside" is working with traditional marketing resources for
the generation of new prospective customers. This means going outside
to find new prospects with advertising, tradeshows, web marketing,
direct mail, salespeople prospecting, etc.
Because of this tendency to focus on MORE PROSPECTS with marketing, waste begins to creep "inside" the company.
The
minute a prospect is introduced or inquires about a company's products
or services, they become "inside" the company. Now the real marketing
should take over. This is where "hidden" new sources of cash, sales and
profits can be found.
These prospects are having conversations,
sales pitches, etc. directed at them by people, staff inside the
company. The prospects have entered the sales process inside the
company.
Every business in the world has the same sales process:
Prospect created -------qualified-------presented-------closed.
There
could be tremendous sources of "waste" along this process. It could be
that the wrong prospects are being created in the first place. Waste. It
could be that the prospect is not being qualified. Waste. It could be
that the presentation made (either on-line or off-line, in person, on
the phone, in an ad, etc. is not being done well.) Waste. It may mean
the prospects are not being closed as well as they could be. Waste. It
could mean that after they are closed, there is no on-going process of
marketing. Waste.
It is everything that happens to a prospect
AFTER being introduced that contains the hidden sources of new sales. It
is what's happening "inside" the company that is as or more important
than what is going on "outside" to generate more customers.
This
approach to marketing is more "non-traditional." Most of our clients
started out thinking the answers for more sales were in the creation of
more prospects. But, soon, the system helped them uncover serious areas
of waste and it was discovered that more sales and profits WITHOUT
SPENDING MORE MONEY TO CREATE NEW PROSPECTS could be had FIRST by fixing
and eliminating areas of waste. (Core Four Steps) Then, more resources
could be devoted to generating more prospects because systems were in
place to make certain there was no waste in the managing of the new
prospect's experience. So, all resources devoted to the creation of new
prospects (Big Four) were maximized, leveraged to their fullest,
creating maximum profit opportunities.
Doesn't that make more sense?
Waste #3: Failure to build a marketing plan around the THREE WAYS TO GROW!
Every
time I ask a business owner for a description or written copy of a
marketing plan, the plan ALWAYS focuses on getting more prospective
customers. This is to be done by advertising, web marketing, tradeshows,
direct mail, telemarketing, salespeople, etc.
In other words, all
plans are made under the traditional definition of marketing i.e. the
introduction of a company's products and services to prospective
customers.
As indicated already, this definition is limited and incorrect.
There are three ways to grow sales and profits for any company. They are:
1. Increase the number of prospective customers contacted or inquiring
2. Increase the conversion rate of prospective customers to buying customers
3. Increase the value of worth of each customer
The marketing plans found at most companies deal only with number one - more prospects.
All marketing plans in the 21st century should revolve around ALL THREE!
If not, there is potential for tremendous waste. And, that is exactly what we find.
All
business owners should hold their "marketing"departments and
Vice-Presidents to the metrics or measuring of all three ways to grow.
This way, assets become optimized. Waste is eliminated. The three ways
to grow makes certain that all possible sources of cash and new sales
are being considered.
Business owners should receive a weekly report from marketing that
gives an accounting of marketing's performance in all three areas. The
conversion rate doesn't only apply to salespeople closing sales. It
applies to web click through and conversion rate, direct mail response
rates, telemarketing response rates, etc. In other words, there might be
several "conversion" rates in a company's marketing process.
The
"value" or "worth" of each customer is increased by doing more upselling
on the front-end and more "back-end" selling after a prospect becomes a
customer. Step number three in our system specifically focuses on
increasing customer value.
The three numbers of prospect contact
rate, conversion rate and value level are the three numbers a business
owner should have a daily accounting for and should insist that the
marketing department plan around all three ways to grow.
Waste #4: Failure to have a USP - Unique Selling Proposition
Unless
any business owner or salesperson can tell a prospect in 90 words or
less why they should do business with a company and not the competition,
there is waste.
The USP is a selling proposition. Not a mission
statement. Prospects and customers don't care what your mission is. They
only care what you can do for them better than anyone else. That is a
USP.
Dominos Pizza created a stir with a 30 minute delivery or
FREE USP. It took the company to the top of the industry. Now, all Pizza
places can get you a pizza in 30 minutes. It is no longer unique.
Dominos must now create a new USP if they want to get back to the top.
What is your USP?
A
USP is not "good quality" or "good service" It must be more specific
and if possible quantitative. If possible, it should be as overt and
significant as possible. Not found in the fine print of a warranty
statement.
If you're unclear what your USP might be, listen to the
top salesman in the company. They are often selling what it is
customers really want.
Most companies think that "branding" is all
they need to do. Again, branding is not a USP. It might be a
description of your company or a position in the market your company
wants to take. Again, these are not USP's. They can support and help
introduce a USP, but they are not selling propositions. A USP must be
able to be sold.
If a business owner is not clear what the USP is,
certainly prospects and customers won't be clear. Look closely at the
marketing assets of owner expertise, time in business, company
credibility, to see if USP can be uncovered.
Talk to customers and
ask them why they do business with you. Research and examine the
competition to see what they might be selling as a USP.
However,
the most important of all these is the competition. A USP is not
necessarily what the owner thinks it is and even what customers might
say it is. If the competition is doing it, it is not a USP. And, it must
matter to the customers. You might have the most unique product
available, but if customers don't want it or don't care about it, it is
not a USP. Step one of our system focuses on helping a company develop a
USP.
The USP is the first and most important part of any
marketing plan. It must be determined first because it will then often
determine which target markets should be pursued. It is the market
research that should be done to understand the strengths and
opportunities for the company. The USP becomes the "core" or foundation
of all marketing and sales efforts.
Waste #5: Failure to communicate and integrate the USP - on-going sales training
Most of the time, a company can uncover and define a USP but then they fail to integrate the USP successfully.
Almost
all USP's fall short because the salespeople aren't on board. They are
not incorporating the USP into their sales presentations. A good USP
integrated into a sales presentation can increase conversion rates
significantly.
But, usually, salespeople go back to what they are comfortable doing.
A
business owner must require the marketing department to see that the
USP becomes integrated into all marketing and sales processes. This is
from placing ads, business cards, brochures, displays, scripting for
those answering the phone, etc. It needs to be incorporated into the
sales presentations and any on-going marketing communication with
customers.
The USP should be on the home page and incorporated into every other page of the company's website.
This
goal of complete company integration starts with the salespeople. That
is why sales-training needs to be an on-going concern with any company.
New salespeople need to be trained what it is they really sell! The USP.
They need to always be trained in how to qualify, present and close
more effectively. The more training done in these areas, the higher the
closing rate will be. The margin between the company's current closing
rate and 100% is an area of marketing waste.
This is why sales
trainers are paid a lot of money! They increase the closing rate for a
company which translates into higher sales and profits! Less waste. When
marketing is able to get sales integrating the USP, then implementation
of the system is more successful. Salespeople are on the front line.
They know what customers are saying and what they like or dislike. This
can mean adjustments to the USP can occur regularly and quickly.
A
company might have more than one USP depending on different revenue
sources. USP's change. They should be reworked and looked at on at least
an annual basis. The key factor in change is what the competition is
doing.
Waste #6: Failure to understand the Lifetime Value of a Customer
A
big area of waste in a company is when marketing decisions are made on
the one-time purchase of a customer, not the life-time value of a
customer.
For example. A retail clothing company might do a direct
mail piece or have a catalog as a way to attract new customers. Let's
say the mail piece generates 10 new customers that bought an average of
$100 in retail clothing. That's $1000 in sales. In this case, the cost
of the mailing, postage, printing, etc cost $1,500.
The company concludes that the mailing didn't work.
That is a waste. A big mistake. What is being wasted is the future opportunity for more customers! Why?
Let's
say this retail clothing company has a great product, good customers
service and on average those 10 customers come back twice a year and
spend $100 each time and keep coming back for an average of 10 years!
That's 20 return visits at $100 a piece or $2000. This times 10
customers is a total value of $20,000 generated all from a $1,500
mailing! $20,000 is the lifetime value of these 10 customers. Not to
mention the referrals or family members they might motivate to come and
start buying.
The waste is $20,000 in new sales opportunity
because the company stops doing the mailing! They concluded that they
lost money on the mailing because they calculated only from the first,
one time purchase, not the lifetime value.
The industry that
understands this concept very well is the music and DVD clubs. For $1.00
you can get 5 FREE DVD's. We all know it cost the company more than
$1.00 to ship 5 FREE DVD's. What we don't understand but the company
does, is the lifetime value of a new customer. They have calculated that
over time, or a lifetime of the average customer, there will be
additional orders on average that more than make up for a slight loss in
the original mailing.
This is how a marketing budget should be
determined. As long as the cash flow can handle it, more and more
testing should be done and evaluations made on the lifetime value
concept. Even if a company needed to borrow money to do marketing, they
may find out that marketing brings a better return than any other
investment the company could make. This is often the case.
This
lifetime value is the same information used by manufacturers in
determining to purchase a piece of equipment. Up front, they may not
cover costs but over the lifetime of the equipment, the return justifies
the investment. Such should be the same thinking about marketing.
Waste #7: Failure to make advertising Direct Response
In
the 21st Century, the investment required for successful media
advertising can be very significant. Many business owners try to do a
little bit of advertising in the paper or radio or billboard, etc. but
find out they don't get back any return. They become frustrated and
upset.
There are two reasons for this frustration. First, there
probably isn't enough advertising going on in a synergistic way that
creates results. If the company is advertising on radio, they might need
to do newspaper and billboard as well. If they start marketing and
advertising on the web, they probably need to do off-line marketing to
support it. These costs and investments can become very difficult to
maintain. A huge waste of money.
The second reason the advertising
falls short is most are doing what is called "institutional
advertising" rather than Direct Response advertising. They are sold by
the advertising agency that "branding" and "positioning" is important.
They are told that if they don't advertise, their competition will and
beat them to the customer. These are both possible true statements. But,
not necessarily true.
Our recommendation to small business is to make all advertising direct response.
That
is, make it create a response of some kind i.e. a lead, purchase or
request for more information. That way, the advertising can be measured.
It can be held accountable.
Direct Response is covered in step
five and seven of our system. Briefly, there are several important
elements that should go into every advertisement that makes the ad
direct response. These elements include: Headlines, sub-headlines, good
copy, offer, urgency, reply mechanisms, bonus, P.S., etc.
If a
company will follow these rules, the advertising can be tracked and
different testing accomplished. Institutional advertising simply tells
people that the company is in business and has great service. There is
no USP, offer, urgency, bonus, reply mechanisms, etc. Therefore, the
company cannot measure results. A big waste.
By implementing
direct response marketing into all advertising, different testing can be
used to make the same dollar invested return more in leads, sales or
even an opt-in E-mail database. Waste (in the form of non-producing ads)
are eliminated.
Even with direct response, there is branding and
positioning that can be accomplished. At the same time, if there is room
in the marketing budget, branding and institutional advertising in and
of themselves can be effective.
It's simply the case that most small to medium sized companies can't afford both types of advertising.
Waste #8: Failure to leverage relationships: Inside and outside the business
Whether
a business is just getting started or has been in business many years,
one of the biggest wastes that occurs is the failure of the business to
examine how relationships with other businesses and customers can create
a lot more sales.
These are referred to as endorsements and alliances. They are covered in step four of the system.
The
most significant marketing asset of any business is the customer base. A
business owner should know which customers can lead the business to
more customers. An endorsement is secured and an endorsed mailing is
sent to the clients and or customers of the company's customer. This can
open the doors to thousands of prospects - WITHOUT SPENDING MORE MONEY
ON ADVERTISING.
So, the rule should be to examine the 20% of
customers that are generating 80% of the business. Approach them for an
endorsement (of the company's USP) and work out a regular endorsed
mailing. This failure to use customers in this way is a big marketing
waste.
In looking at the 20% first approach those customers who
are already giving the company referrals. This endorsement simply
becomes a more formal consistent way to generate more referrals.
Then,
look outside the company database. Look to complementary businesses
that have customers or clients your company could serve.
Approach
these businesses with the same endorsed mailing opportunity. Maybe you
can endorse them to your customer base in return!
Don't let these relationships go underutilized - such a waste.
Waste #9 Failure to implement Direct Marketing
Throughout my consulting experience, I have come close to creating the CORE five. This would include Direct Marketing step #7.
This
is because the most underutilized marketing asset in any company is the
phone. It is so inexpensive yet can yield so many new profit
opportunities. Any use of phone could be classified as direct marketing.
It can be used to generate leads, repeat business, upselling, close
sales, follow-up on prospects, etc. Yet, many companies don't use it as
they should.
Much of the same could be said now for E-mails. They
can do much the same as a phone - contacting prospects, following up on
presentations, upselling, creating newsletters, etc.
Direct
marketing includes: direct sales by salespeople, E-mail marketing, Web
marketing, teleprospecting and telemarketing, direct mail, etc. These
are all marketing methods that can be tested on a small scale, without
risking a lot of dollars to find out which can work and which won't
work.
One of the biggest marketing wastes is that companies roll
out marketing in big numbers before testing on a small scale first. One
Artist's marketing director invested $20,000 to print and mail 20,000
catalogs to museums. Not one sale. He should have tested with 2000 first
to see if anyone was interested. This would have cost $2,000 instead of
$20,000. He wasted $18,000.
There are probably staff members in
every company that could test offers, etc. on the phone. Contact top
customers to upsell or invite them in for a special offer. Salespeople
can be calling during downtime.
Clearly, one of the biggest wastes today is that companies are not testing direct marketing on the world wide web. Waste #10.
Waste #10: Failure to start marketing on the Web
The
technology of the web has evened the playing field between large
companies and single owner companies. What a great opportunity for small
businesses. Yet, most still don't even have a web site. What a waste.
Internet penetration is now at 69% for North America. The number of high-speed internet users almost doubles every year.
The
first objective of course is to get the company a USP. From there, you
can determine if this USP can be sold over the web either by providing
more information for prospects to learn about your company or actually
creating a sale - E-commerce.
Yet, the purpose of this section in
the report is to encourage all companies that have static information
websites to begin thinking about how they can make sales from their
site. You can test a pay per click campaign for less money that you can
do a direct mail campaign to learn the same things.
The
international usage of the web is also expanding. Asia has 418 million
users, Europe 322 million, North America 233 million and Latin America
110 million. With those numbers growing year by year, there could be an
opportunity for any company to sell something to them over the web.
Internet
marketing - is your website making enough sales is addressed in the
bonus step of our system. It is important to make an evaluation of your
website and have the help of others in determining how best to use the
web. This is why this bonus step is also considered part of the Big
Four. You'll need the help of designers, programmers, marketers, SEO
experts, etc. to succeed, whether you do these tasks yourself or
outsource them to others.
As long as you stay away from the web,
there is waste. Even if you have a local store that sells only locally,
the web resources can be a big help in creating more sales and profits.
Learn how to use this technology to your benefit and eliminate that area
of waste in your marketing.
CONCLUSION
I hope this free
report has been of help to you. Even if you don't become our customer,
you can find new cash and new sales by eliminating these areas of waste
in your marketing. And, if you do become a customer, I'm confident
you'll be able to systematically eliminate all of these wastes by
implementing our system into your business.
Either way, I hope you'll find great success in your marketing efforts.
For 15 years we have helped businesses increase their sales and
profits 25-100% or more, without spending more money on traditional
advertising.
We've created a unique, non-traditional marketing
system that helps companies uncover, leverage, and optimize their
existing marketing assets.
Our system is featured by Dell, IBM,
The International Guild of Professional Consultants and the US
Department of Commerce's Manufacturing Extension Partnership.
3:38 PM
ENSA MAROC
