JULY 11, 2003

BOOK EXCERPT


Picking the Low-Hanging Fruit
Small-business owners don't have to spend a fortune to boost sales, as author Mark Stevens explains in Your Marketing Sucks


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Problem: You have limited marketing dollars, yet you need a substantial boost to your sales and earnings.
Solution: Pick the low-hanging fruit, such as selling more to people who already have a relationship with you.
Benefit: You should get a whopping return on your marketing investment.


While you are seeking to open entirely new markets, or sell new products, remember that there is low-hanging fruit all around you ready to be picked. Cultivate this first.

Imagine this scenario: An aggressive, highly regarded chain of home-improvement stores negotiates with a hot fashion designer to have him develop a licensed line of high-fashion paints, wallpaper, and window treatments. After the deal is inked, and the stores are stocked with the attractive and highly salable goods, management hangs black drapes over all of the shelves designed to display the merchandise. The result? Consumers cannot see that the chain offers an incredibly attractive line of home goods (see BW Online, 7/11/03, "The 'Useless Marketing' Trap").

Far-fetched? Not as much as you may think. The failure to clearly inform customers and clients of the products and services that companies have for sale is widespread throughout virtually every industry.

An informal roundtable held by a Hartford (Conn.) consulting firm demonstrated this (much to the pain and chagrin of the firm's managing partner). One evening, a group of clients were invited to spend an hour with the firm's management to talk about how well the firm served them. (That, in and of itself, was a terrific idea, one that more companies should emulate. Periodically, take clients out for a nice dinner. Reserve a room at a fine restaurant, and use your guests as a sounding board.)

At one point in the roundtable discussion, the managing partner asked if the clients were pleased with his firm's services. Although the overwhelming majority said that they were indeed happy, and more than satisfied with its performance on their behalf, most were united in a single but highly important complaint. They made it clear that the firm failed to inform them of the full suite of its services. As one client put it bluntly, "You don't tell us what you do!"

Although the firm offered a broad range of services, the partners in charge of client accounts tended to focus only on their area of expertise, keeping their clients in the dark about the broader range of the firm's capabilities. Clearly, this was the near equivalent of acquiring a designer line of furnishings and putting black drapes over the shelves.

Specifically:

• One of the clients who complained had turned a children's-crafts business from a startup into a $50 million-a-year enterprise. When she went through a highly contentious divorce, it became necessary to engage a professional to conduct an appraisal of her business. This would be important in negotiating the divorce settlement. At this emotional time in her life, she would have liked nothing more than to work with the Hartford consulting firm that she trusted as her ally in business, a resource that had helped her business grow. But she turned elsewhere, because she didn't know that the firm offered valuation services. All too often while companies are looking for the "big win," they are engaging in the "big loss." Here, simply because the client was not informed of the full range of services, she was forced to go outside her comfort range to an unfamiliar service provider, and the consulting firm lost the potential revenue of a business-valuation engagement.

• Another client who owned a chain of automobile dealerships shared a similar story. He had founded the business with his brother, who -- until his recent death -- had managed the operations side of the business, while the survivor had focused on sales. At the time of the brother's death, the business needed to upgrade its information-technology systems. Unfamiliar and uncomfortable with technology applications, the surviving brother turned to a technology firm to assess the dealership's existing systems, recommend an updated network, and install the related hardware and software. The sin of omission was that the Hartford-based consulting firm offered information-technology services but had failed to make this known to a sufficient segment of its client base. Once again, a long-standing client was forced to come out of his comfort zone and go elsewhere for a service that the firm offered. Another example of the firm's missing the opportunity to pick low-hanging fruit.

We are going to explore the importance of cross-selling in a second. But first, an important point. Cross-selling is not the only form of picking low-hanging fruit. Obviously:

• You could find a competitor with a higher price and undercut him. This is especially effective if you are both selling a commodity. And it works particularly well as a "Trojan horse." You use the low price to lure customers into your store (or into visiting your website), where, you hope, they will find higher-priced merchandise to buy.

• You can add a feature that no one else has. There are three dry cleaners in your town? How much market share could you gain if you offered to pick up and deliver? Seems simplistic? So what: It works. When I moved to the town I now live in, only one dry cleaner offered pick-up and delivery service. Given that my days are crammed -- which gives me no time for errands -- I selected the one firm that would do the errand for me. (And that company, in turn, picked the low-hanging fruit: my dry-cleaning business.)

• You can identify (and hire away) salespeople at competitors who have relationships with customers you covet. Yes, sometimes they will have "noncompete" contracts with their current employer, but often they won't, and equally often, the noncompetes are written so broadly as to be unenforceable.

But while these -- and the other variations you could identify -- are all appealing options, the biggest opportunity to pick low-hanging fruit exists in cross-selling. So let's focus our attention there.

The importance of cross-selling: Cross-selling is powerful because it is pervasive and relatively easy to transition opportunity to results, measured in dollars and cents. The vast majority of businesses have a customer base composed of individuals who have purchased their products and services in the past. The disturbing paradox (proof positive that most marketing sucks) on which few businesspeople will challenge you is the fact that "it is easier to sell something to an existing customer than to a prospect who is unfamiliar with your business." However, while conceding it is true, few companies act on this fact. All too often, companies spend virtually all of their marketing dollars, time, and talent seeking to generate new business relationships while the low-hanging fruit dies on the vine.

This is evidenced by the fact that the majority of companies fail to capitalize on the exceptional opportunity represented by their existing customers. Lazy Marketing! Lazy Marketing!

Continued on next page>>  | 1 | 2 | 3




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