Sales and Marketing

The #1 reason new businesses fail is not lack of marketing, but lack of sales.

The #2 reason why new businesses fail (especially those that sell products and services to other businesses or sell products via distribution channels), is that after they successfullly sell AND deliver, they don't get PAID. This is euphemistically known as "cash-flow" problems.

Word of mouth marketing is the best form ofadvertising, except for the minor problem that you first need to have customers before word of mouth can kick in. (They should be raving fans, or at least very satisfied customers.)

 

Sales and Marketing - or - Relevancy

Ultimately, a great product desired by your target market can be sold even with shoddy marketing, but the best marketing in the world will not sell too many shoddy items to prospects who don't want or need it.

Forget the myth of selling ice to an Eskimo. That only happens in the fantasy of the "super salesman".

Success in sales is more about targeting the right prospects, and following a systematic approach to selling, than about being the most pursuasive guy in the world. 

While you get some fantastic car salesmen on the dealer floor, remember, the prospect that walks onto that floor is already highly targeted - someone potentially interested in buying a car.

Take that same top salesman off the floor, and dump him in a mall, and make him sell cars to prospects at random, then see how succesful he is! That cannot be. Therefore, yes people have different raw "sales ability" or diligence (one guy on the floor will sell far more cars than anyone else) but no salesmen exist that can sell any product to anyone or everyone at random.

Therefore never hire really expensive sales people into a start-up business or a small business. Rather hire cheap, motivated people (that you can train up), and put a great sales system behind them that gives them the opportunity to sell a desireable product or service to potentially interested(targeted) prospects. 

It is easy to burn 100's of thousands (or even millions) on salaries for these hot shot sales people (who always insist on large basics) that will not bring you any results. Betting your company's future on them can ruin a business.

 

Brand building

This is what most people think marketing is allabout. About getting awareness. Getting your name out there.

For anyone doing less than R 10M in annual turn-over this is probably false.

The only type of awareness that works for a smaller business is word-of-mouth referrals, and that takes time - so it automatically excludes any new business. (Unless you have serious capital and funding behind you to get you through this "dip")

The threshold of effectiveness.

 

Those that have the pockets (and staying power in terms of time) can advertise almost without risk, whilst everyone else falling below the threshold of effectiveness are guaranteed to be putting fire to their money. Their marketing spend just went to money heaven. No return.Nothing. End of story. Money gone. 

Those who can afford to spend millions on advertising to imprint a brand into prospective minds, to associate that brand with a unique position in the market place or associate it with a unique value proposition, that can afford to recoup such an investment over many many years...

For them blunt mass market approaches to marketing using mass advertising mediums can work. 

Those will do very well to study the following books by Ries

Positioning

Battle in the boardroom

22 Immutable laws of marketing

Differentiate or Die

(These books cover the topics of what makes a great brand name - its how it sounds not how it looks when written down that matters - it must be distinct -it cannot be a generic word used in the word's normal meaning - it must be easy to figure out how to spell it from how it sounds - it must STAND for something- you cannot attach the same brand to diverse lines of business... etc)

 

Marketing AS advertising

What about the rest of us, that don't have millions in advertising rands to spend?

What if instead of using marketing as an "awareness" tool, you used it as a "sales" tool?

What if a piece of advertising was rather than something that just informs people about your company, products and services, it was a salesman in print?

 

Meet the art of Direct Response Marketing

Imagine someone could write a page so compelling that 5 in 100 people who read it, would actually buy the product? (Hypothetical example, depending on medium and targeting, the sales conversion rate could vary from 5% to 0.05%)

This could happen in a general publication if the product has broad appeal,or for niche products advertised in a trade specific publication or special interest publications. (Or with highly targeted mailers going to carefully crafted mailing lists)

Do you remember those clip-out coupons in magazines to order some fantastic product?

Have you ever gotten offers for personal loans in the mail?

Have you seen TV infomercials with a direct call to action, telling you thatif you BUY RIGHT NOW (and our operators are standing by), you will not only receive this at our fantastic special price, but also these free bonuses thrown in...

What I can tell you, is that these marketers are carefully measuring their response rates to every screening of their ad, to every run of their print ad etc. They sometimes make minor adjustments to get maximum response, they are guru's in sales psychology and copy writing (the art of selling in print).

This is also done to great effect by many on the Internet. The Internet is the ultimate direct response sales platform - where every action is instantanously measured, and technology exists to show thousands of page variations (the process is called split testing) to millions of different prospects, and automatically adapting the message to get the highest responserate (click-throughs, electronic purchases, lead forms completed etc).

 

The ROI Marketing Mindset

R.O.I Marketing = Return On Investment Marketing

WHAT IF: If for every R1.00 you spent on advertising, it generated R 1.10 in profits from sales?

 

How much could  you then afford to spend on advertising? As much money as you can find. (Or until the market or medium is saturated)

Life time value of a customer plays a big role in the long term, and includes the effects of repeat sales, upsells, cross-sells, ongoing services and support, and the value of referrals from the original client.

In the short term, for any smaller or new business, you need to make a return NOW.

 

 

Cold Calling is "mostly" for losers.

The problem with cold calling for most products/services, is that its another form of the "super salesman" myth, or even a twist on the "sales is just a numbers game".

In this version of the story, if someone is pursuasive enough he will sell lots to random strangers.

Or if simply enough phone calls are made to random people, some of them are bound to be interested in buying the product, through sheer luck of the draw.So its simply "a numbers game".

Or so one would think.

However the barriers to succesfull cold calling include

- Its harrassment marketing- You are INTERUPTING someone to sell them something

- You burn out good salesmen on bad prospects.

- So many others are cold calling that it immediately has a negative association in the minds of prospects

- In many places in the world cold calling is becoming illegal.

- You are the person chasing them, rather than them chasing you. Creates a weak psychology where the salesperson has to continuously kiss *ss to make the sale. When prospects PHONE YOU instead of you phoning them, you will get much better results.

 

There are some successful outbound call centers, so of course for certain products, using certain targeted phone lists (or products of exceptional broad appeal), or in cases where the product value justifies the cost, it can be done. (I know of people selling armed response services and certain financial products successfully in this way)

For those interested in cold calling, I would suggest buying training from the world's top expert in cold calling, Ari Galper, from his website: http://www.unlockthegame.com/

 

For the rest, its worth investing in lead generation methods, or striking lead referral deals with other busineses that sell different products or services to the same target segment, or who's clients will also need your products.

Imagine guest houses that send their overflow clients to other guest houses,and they all do this for each other in turn. Or imagine the estate agent who refers all his client's home loan applications to a bond originator, and his attorney work to specific attorney. Or a contractor for airconditioning installation that partners with several builders.

Fit of Medium to Market 

For every type of product/service/market some advertising mediums work better than others. 

You need to find the mediums and messages that work the best for you, then leverage your spend in that medium until you hit saturation.

Multi-medium strategies are for those that have access to large marketing budgets.

Mediums to consider:

Radio, print, tv, Internet (search targeting, banners etc), billboards,sms etc...

Trade shows where you can capture leads.

Building your own email distribution list.

Have a direct marketing approach aimed at specific prospects, to warm them up towards buying (e.g. a specific key account targeting strategy)

Establish yourself as an authority to gain credibility by informing your prospective customers through free guides or breakfast sessions.

Creativity can make you stand out. (e.g. handwritten postcards, individually addressed items, special gift items that promote you)

 

Building a distribution channel is a form of outsourced marketing and sales

Margins and profit potential has to be good for partners, and must have low risk and distraction potential for them. The product also have to offer value and appeal to end customers, and ideally have a point of difference.

Depending on the product, you often need to first prove that YOU can sell it before anyone else will try to sell it.

IE for many products building a distribution channel is not the starting point, but rather the way to multiply existing success.

 

Selling Visionary Big Ticket items

This is generally for those that really believe in something big that they are willing to spend a life time (or at least 10-20 years) to realise and have obtained the deep pockets from prior business or investing successes to fund it. (Or are well connected to wealthy individuals and venture capitalists)

For an example of a visionary salesman that took upon this path, and to see what lessons you can learn from him, check out:

http://www.inc.com/magazine/20100401/on-the-road-with-a-supersalesman.html

It may also prove helpful for those trying to produce visionary high tech products to read the book Crossing the Chasm. 

Very few high tech entrepreneurs become successful in South Africa, with Mark Shuttleworth being one of those few exceptions.

What few people know is that Paypal, Tesla Motors (innovator in high performance electric cars), and Yola.com (one of the fastest growing web site building tools in the world) were all founded or co-founded by ex South Africans that moved to the US, because in the US - funding, networking and a ready market on your doorstep is all available.

Therefore, think carefully before trying to launch a high tech innovator in South Africa. There are success stories, but trust me, I've seen many failures first hand. (I've personally been involved in some high tech start-ups that killed millions in venture capital funding). For those that embark on this path, I can offer many hard won lessons in my one-on-one coaching. 

 

A few words on Getting Paid

The single biggest predictor of getting paid, is taking an upfront deposit. 

The very act of paying the deposit, conditions your client into the motions of disbursing money into your account.

Other techniques that help to minimise credit risk

- For recurring services, invoice on DAY 1 of the month, with payment due within 7 days, rather than of the last day of the month. This way you effectively get paid in advance, and have a safety buffer of time.

- Create penalty clauses for late payment that the client signs when he accepts the order or signs the intitial service agreement. E.G. 20% per month interrest (this is legal since it is penalty interrest to a business, not a sale on credit - legal as long as penalty interrest doesn't exceed original debt amount).

- Create incentives, especially for professional services, offer an early payment discount.

Don't ever fall into the trap of setting up a situation where it would be "rude" to ask for your money, where you are so afraid to ask for payment that you are worried that you are "going to lose" the customer.

Remember a customer is only a customer if he pays. Otherwise he is a charity. Long term clients that have always paid you on time and have built up a history of credibility may deserve some lee-way and if you are big enough to afford it, you can offer them credit terms. (BUT VERY CAREFULLY, ideally with some form of security, personal liability, credit guarantee)

Your service should ideally be so useful to a customer that he WANTS to pay you for it, and that he fears more losing your service due to not paying you, than you fear asking for payment that may upset the client. Its also useful if your service or product is critical to the client's operation and you have the right to switch it off, stop providing, keep possession of assets/information or take them back.