The more you know, the more you can forget — hence the need for checklists. There are several major points we need to remember to make sure our Business plans go smoothly.
Want a reasonable chance of achieving your Marketing objectives? Three main areas must be addressed simultaneously:
Speedy growth in market share.
Maximization of net cash flow.
To increase market share, you need to expand your volume — simply put, get more goods out there. This means market development. The main methods of achieving this goal are the first two of seven sub-objectives for improving profitability:
Market to new segments. Review your current customer profile and base to truly understand the core customer. Once this individual is correctly profiled, the peripheral customer can be carefully targeted and/or segmented from within your database.
Appealing to this “new” customer through graphics and offers should either be done as a separate enterprise with its own distinctive identity or developed through minor adjustments. Though it seems obvious, there are many cases where creative and Marketing modifications aimed at hitting the new target were implemented too quickly and sacrificed the core customer.
Convert non-buyers in existing segments. Don Neal, Director of Business Development for Hallmark Business Expressions, says “a five percent increase in customer retention can have a bottom-line profit increase of 75 percent, depending on the industry.” The vast differences in customer value are echoed in the a similar story with Cadillac calculating the lifetime value of its top customers at $332,000. At the other end of the scale, Pizza Hut figures its customers are worth $8,000 in bottom-line lifetime value.
Non-buyers are lost customers. To get them back, you can’t treat them the same as other segments — or worse, simply give up on them. The first step in eliminating lost customers is to get first-time buyers to buy again and get into the habit of buying from your company. Mail often and keep test offers in front of customers.
To improve profitability, you must give attention to market penetration and increased efficiency. For market penetration, you need to ask how big the market is and how big your share is. You can gain share through two major avenues (the next two points).
Increase the frequency and use of your product/service. Consumption can be increased by more frequent mailings, added products/services and the creation of new uses for your products.
A packaged-goods company raised its market share several years ago for a disposable dishwashing product (you can do the same for a software product) by positioning it as an inexpensive, but effective and safe, alternative to a brand-name product. Always remember: What a product does now often isn’t the only thing it can do.
Attract your competitor’s customers. Packaged-goods firms are the ones to watch when it comes to customer conquest.
Often in a saturated market, they employ (with mixed success) couponing, free samples and loyalty programs. For instance, the maker of the dishwashing product mentioned above gave away samples to create a database and back up its claims of excellence.
But while you’re busy creating new customers, and retaining old ones, you also need to increase efficiency. The following three strategies are the best way to achieve this.
Reduce your costs. Easier said than done. Marketers are experts at finding ways to cut expenses, but there’s never a time to rest on this subject. Make sure, for instance, that your vendors are ever vigilant and looking for the best deal for you – not only for them.
Investigate ways to help your cash flow too, but don’t reduce it at the expense of sound relationships. Ask any vendor who it will do the best work for — the marketer that pays on time or the one that makes the vendor wait four months — and you can bet on the answer.
Improve your price(s) and/or your offer(s). A testing program is a must. To know what to test, you need to be aware of what your competition is charging and offering now, not what it was doing four weeks ago. Keep your competitive information up-to-date.
Rethink offers in terms of getting more money in the door faster. One successful tactic has been to put an outstanding offer on a customer’s invoice; the offer is good only if the invoice and the new offer are paid for within a certain time period.
Improve your sales mix. What are you offering and what more could you offer while remaining true to your overall positioning? Is there an opportunity for a spin-off? Can you bundle items to make them look new, different, more appealing? Create a list of relevant questions and review it regularly.