<\/p>\n

A<\/strong><\/span>s the economy continues to bounce along, (some say showing signs of a small movement off its bottom while others disagree), business owners and managers are getting impatient to find ways to boost revenue.\u00a0 Not only are we seeing evidence of this within our own client base, but also\u00a0our “Insights” blog post on \u201cDiagnosing Stalled Sales<\/em>\u201d, published in June of 2011,\u00a0has re-surfaced recently as the top-read posting on the all time QMP blog popularity-list.\u00a0 The second most popular blog on that list is “The Marketing and Sales Audit<\/em>\u201d.\u00a0 Business leaders are looking for revenue answers.\u00a0 Standing idly by and waiting for the economic recovery is no longer a reasonable option.<\/p>\n

As I re-read that \u201cDiagnosing Stalled Sales<\/em>\u201d post, I realized that it was too diagnostic and not prescriptive enough.\u00a0 After all, what good is a diagnosis without a treatment? Apologies to those readers who came away from that post less than satisfied. This post makes up for that shortcoming.\u00a0<\/p>\n

Deciding What to Do<\/span><\/p>\n

The first thing to recognize is that all revenue increases must come from one or more of the following four sources: 1) introducing new products, 2) stealing market share from competitors (new account wins in your current markets), 3) the natural momentum of your current markets or 4) penetrating new markets.<\/p>\n

New Products:<\/span><\/p>\n

If you have a new product-development initiative in the works, good for you.\u00a0 But pursuing this option for increased revenue typically takes time and money.\u00a0 Both are in short supply these days for small to mid-size businesses, exacerbated as our clients currently relate, by the challenge of tightened banking requirements.<\/p>\n

New product development initiatives typically fall into one of three categories: a) improving what you already offer, b) meeting some new customer requirement or c) launching a breakthrough.<\/p>\n

Meaningful overnight revenue upsides are rare from new products as it takes time to develop, tool, test and introduce a new product.\u00a0 It then takes time for the market to become aware of it, understand it, change their old ways of doing things (and who they may be buying from) and begin to adopt your new product.\u00a0 There are ways of accelerating this adoption rate, but only if the product is a breakthrough – something that fundamentally turns the market on its ear. \u00a0Even in that case, time is the challenge. \u00a0Twenty-five years into its existence, I still meet educated people who don\u2019t own a personal computer, and it took 50 years for the automobile to be completely adopted by consumers.<\/p>\n

Don\u2019t get me wrong, new products are strategically important for a firm. I strongly encourage new product development, particularly if the product fills some need the customer didn\u2019t even know they had \u2013 a real breakthrough.\u00a0 Breakthrough products typically bring sustainable growth, give customers a meaningful reason to change and provide higher margins.\u00a0 (More on this subject in a future blog post on the subject of Innovation).<\/p>\n

So, keep developing; keep considering new ideas; just don\u2019t expect the heavens to open and revenue to come raining down quickly.<\/p>\n

Stealing Market Share from Competitors:<\/span><\/p>\n

One of the fundamental principles of military strategy is, \u201cThe hardest ground to capture is the ground that is occupied. It typically takes anywhere from 3 to 6 times superior resources to take over a position from an occupier.\u00a0 Interestingly, most of the initiatives that small to mid-size companies attempt (unwisely) to increase sales fall into this, the most challenging category.<\/p>\n

These days, there are a number of popular marketing initiatives that are all the rage – search engine optimization, the use of AdWords, re-branding, social media and database marketing – to name a few.\u00a0 These are not inherently bad or good.\u00a0 However, the key to achieving significant growth with any of them is to assure their use in a focused way combined with growth options #1 (Introducing New Products) or #4 (Penetrating New Markets).\u00a0 Using them in a focused way assures maximum return for minimum investment.<\/p>\n

Some of you may decide that this option, stealing share from competitors, is the only one available to you and that you don\u2019t have time and money for new product development or to try to penetrate a completely new market.\u00a0 If you do, the road will be difficult and certainly take more resources and time than you anticipated.\u00a0 If you can\u2019t be dissuaded, here are some tips to make it easier:<\/p>\n

a) Try to fragment your competitor\u2019s market: Find and target sub-sets of customers that have a common dissatisfaction with the competitors\u2019 offerings.\u00a0 The Japanese didn\u2019t attack the US auto market all at once on all fronts.\u00a0 They focused first on the most vulnerable and receptive set of customers with a quality small car offering. \u00a0After establishing this foothold they expanded based on their proven quality reputation.<\/p>\n

b) Tailor a market-specific benefits story to the customers in the specific target market fragment you wish to penetrate.\u00a0 You may even wish to set up a separate website for that specific market. At minimum you will need a focused sales presentation.<\/p>\n

c) Focus your sales team on that segment and train them to tell that market-specific story.\u00a0 Make a concentrated effort for 90 days with frequent feedback from the sales team to see if the story is gaining traction.\u00a0 The test of traction is a growing sales pipeline.<\/p>\n

d) Never lead the penetration effort with pricing reductions.\u00a0 You\u2019ll hurt yourself.<\/p>\n

The Natural Momentum of Your Markets:<\/span><\/p>\n

This is the primary problem most small-to-midsized businesses are dealing with. It is true that all boats rise and fall with the tide.\u00a0 That doesn\u2019t mean that some boats don\u2019t move around the bay faster than others, whatever the tide situation. \u00a0There are always segments of a market that trend opposite, or move faster than, the overall economy. \u00a0If the economic momentum of your primary target market has slowed, and doesn\u2019t look like it will return quickly, then it\u2019s time to consider growth option #4 \u2013 penetrating new markets.<\/p>\n

Penetrating New Markets<\/span><\/p>\n

The requirements for a successful penetration of a new market are: a) a good set of target market attractiveness assessment criteria, b) a high degree of focus in your attack on the market and c) rapid feedback and re-targeting process to use as required. You need not make a big, costly production of launching an initiative at a new target market.\u00a0 Assessing attractiveness, focusing and gathering intelligence about receptivity (basically validating the market\u2019s attractiveness) is not a big deal.<\/p>\n

For each of the following questions, start with the phrase, \u201cTo what degree..\u201d and score on a scale of 1 to 10.<\/p>\n

\u2026\u00a0does this market exhibit sustainable economic, demographic or regulatory momentum?<\/p>\n

\u2026 do customers in this market have a compelling problem that can be solved by our product?<\/p>\n

\u2026 does our product offer a clear competitive advantage in solving that problem for the customer?<\/p>\n

\u2026 does solving that problem reap a meaningful reward for the customer – economically,\u00a0emotionally or physically<\/p>\n

\u2026 is there a competitive leadership position available in the market?<\/p>\n

\u2026 can we easily reach customers in this market?<\/p>\n

\u2026 is there strong intra-market communication between peers in this market?<\/p>\n

\u2026 can we sell into this market profitably?<\/p>\n

These criteria will provide a starting point for a relative attractiveness assessment. You\u00a0may wish to use more, or different, criteria.<\/p>\n

Doing it:<\/span><\/p>\n

It is common in slow economic times for sales teams to increase their activity in trying to sell to a wider range of prospects, try to penetrate large accounts that competitors own, campaign for price concessions to win new business and chase opportunities that are a marginal match for the firm\u2019s capabilities.\u00a0 As driven by the survival instinct as these activities may be and as resourceful as they may appear on the surface, they are typically non-productive.\u00a0 In fact, they can be hugely counter-productive. \u00a0The results of such efforts are typically depressed profitability, unsustainable success and trapping the firm into businesses and\/or products it cannot maintain.\u00a0 Such activities can also dilute customer support resources, jerk around product development and operations resources, damage the firm\u2019s quality reputation, start price-wars and cause a distraction of the business from what it does best.\u00a0 It can take many years to recover from the negative consequences of impulsive sales actions taken in the fever and panic of an economic crisis.<\/p>\n

I state the case in a dire scenario because the real key to success is focus and feedback.\u00a0 Focus means staying focused on the target market you decided upon using the criteria above.\u00a0 Feedback means monitoring progress, receptivity and success frequently and adjusting quickly.<\/p>\n

The discipline of a limited number (one or two) highly focused initiatives targeted at specific new markets, followed by rapid sales feedback, has consistently produced good results.\u00a0 When followed-through with discipline the results have been significant. \u00a0Our subject firms have won new clients, avoided price competition, found new ways to provide additional value to customers, increased selling prices, reduced the hysteria associated with trying to respond to every quote that comes within 100 yards of the door, achieved double-digit increases in win rates and made rapid strategic adjustments that saved them from economic disasters.<\/p>\n

The approach we suggest requires the adoption of three basic process disciplines: 1) rapid market assessment, 2) rapid and focused launch initiatives and 3) disciplined and frequent field sales feedback.\u00a0 While these disciplines may be different than what your organization has used in the past, they are easy to learn, cost-effective to deploy and yield a higher probability of success \u2013 in both\u00a0challenging and healthy economic times.<\/p>\n

***<\/p>\n

We invite you to read our related blog posts “Diagnosing Stalled Sales<\/a>” and “Finding New Markets<\/a>“<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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