Small Business

Picking the Low-Hanging Fruit


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!

A perfect example is a New England?ased furniture company with a house file of 26,000 customers who have purchased sofas, tables, beds, carpets, and accessories from the firm's eight retail stores for more than two decades. This customer universe is diverse in age, gender, income, and personality, but they are united in a predisposition to purchase the furniture company's products. And yet the company does nothing to encourage them to do one of the things that gives them great pleasure in life: visit the stores, buy something beautiful, and make their homes more wonderful environments.

Why don't companies do more cross-selling? There are three primary reasons.

They just don't think of it.

Strange but true. They have collected key information about customers -- names, addresses, and often phone numbers and e-mail addresses as well -- and then they do nothing with it, other than to send out the occasional brochure or circular. That's dumb -- and lazy. If you know someone bought a couch from you, why not send her a personalized letter that says, "We just got in an end table that would go perfectly with that sofa you bought from us four months ago. Come in this week, and we'll give you 20% off." By simply mailing customers a postcard promoting attractive products in the stores, they would generate significant traffic and sales from this highly qualified pool of loyal patrons. By failing to take this step, these otherwise aggressive merchants are remiss in cross-selling and, thus, in harvesting low-hanging fruit.

It's "too pushy."

Who says attempts at cross-selling have to be hard sell? DirecTV knows you bought its NFL Sunday Ticket -- a programming option that allows you to watch the televised version of every pro football game, not just the one being beamed into your market. What is so "hard sell" about DirecTV sending you an e-mail saying, "As someone who bought the NFL Sunday Ticket, you are entitled to a 20 percent discount on the NBA Pass" (which allows you to see every pro basketball game).

It's "not professional," or your staff feels uncomfortable doing it.

This is a common objection and gets back to our discussion that you can't turn a nonsalesperson into a salesperson. But that isn't your intention here. You aren't asking a lawyer to take out his order book, or an architect to try to close a sale. You are asking them to listen and then educate clients or customers. Suppose you are a criminal lawyer, and your client mentions in passing that he has succession issues or estate-planning concerns. You can say, right then, "You know, we have someone at the firm who is an expert in...." If that is too direct, mention the same thing in a follow-up note to the meeting that you just had with the client.

It doesn't matter what approach you take. What's important is that you do it, and that your people do as well. If they are uncomfortable, offer coaching on the cross-selling educational process. If you think a more tangible motivation is the way to go, do that. The managing partner at one of Chicago's premier law firms told every attorney who worked there that he was going to make them the highest-paid lawyers in the country, but one of the things they had to do to achieve that status was cross-sell legal services offered by their colleagues in the firm.

Cross-selling in action

Making customers aware of product offerings and seeking to cross-sell them with a simple postcard, letter, or brochure is important, but just the start. Consider it Extreme Marketing 101, the price of admission.

Advanced Extreme Marketers take this concept to sophisticated levels and are rewarded handsomely for it. Let's explore two examples.

The Mitchell family, owners of Richards in Greenwich and Mitchells in Westport, upscale clothing stores in affluent Connecticut towns, have made a science of data-mining the customer base to grow the business to $65 million in annual revenues. Much of this sales volume, which make Richards and Mitchells two of the most successful stores in the nation, is attributed to management's monomaniacal focus on learning as much as possible about its customers on a personal and professional level and then applying this knowledge to service them, building a loyal clientele base. With the customers' assurance of confidentiality, associates at Mitchells and Richards use personal contact and probing questions along with sales SKU data to gather a wealth of information about customers, such as:

Birthdays

Names of children and spouse

Birthdays of children and spouse

Favorite clothing designers

Favorite colors

Buying patterns

Dollar volume of cumulative annual purchases

Unlike other businesses that gather this data and then let it sit idly on a server, Mitchells and Richards apply it in a series of pragmatic initiatives designed to drive customer loyalty and sales.

For example, customers:

Are often called on their birthday, or sent a birthday greeting.

Are given advance notice when their favorite designers' merchandise has arrived.

Receive a "bonus" check each spring for anywhere from $10 to $150 based on their cumulative purchases the previous holiday season. This provides an incentive to the best customers to remain loyal to the store and increase their purchases during a regular price period.

The second example involves Pottery Barn, which sells home furnishings and accessories. The company invites customers to fill out an entry form for a gift certificate and drop it in a fishbowl placed at the register.

The form asks for the customer's name, street address, and, most important, e-mail address. For pennies -- the price of the pad that contains the form to fill out -- this extreme marketing technique enables Pottery Barn to cross-sell customers immediately and effectively. I learned this firsthand.

I recently visited the Pottery Barn store in Westport, Connecticut, filled out the entry form, dropped it in the bowl, and went shopping in the store (purchasing, as it turns out, a glass flower vase).

Within a few days, a beautifully constructed graphic e-mail arrived on my laptop screen, enticing me to purchase additional Pottery Barn products, including sale merchandise and new arrivals. Because I could see the goods and almost touch them, Pottery Barn effectively brought the store to me, and tempted a proven customer -- one who liked the Pottery Barn concept, aesthetics, and price points -- to extend his shopping experience, in this case online.

This Extreme Marketing tactic is interesting for two reasons. Pottery Barn

Secures the e-mail addresses for the price of an entry slip.

Stays close to its customers with frequent e-mails that entertain, inform, and prompt the customer to shop, shop, and shop.

Proof positive that Extreme Marketing doesn't have to be expensive. It is often the inexpensive, overlooked steps that, when stitched together and integrated in a cross-selling program, enable a business to cultivate copious amounts of low-hanging fruit.

Companies are often so focused on "what they sell" that they overlook "what they can sell, but fail to." Consider the case of BAJA -- a fictitious name for a real company -- which specializes in the design and installation of home-entertainment and automation systems. In the "love them and leave them" approach that is all too common among companies large and small, BAJA would book a sale, design the customer's technology, and then install it meticulously and professionally.

But once the job was done, BAJA would move on to the next prospect, leaving behind the most recent installation with a satisfied client who had been sold, billed, and put in the company's files.

BAJA's focus on detail and excellence in products and services created an enormous amount of goodwill, which the company could have leveraged in making additional sales. For example, it could have done everything from providing financing for the home entertainment systems -- which could easily cost more than $100,000 -- to providing extended-warranty service. But management rarely cultivated this opportunity. Instead, they turned to the next referral and simply moved on, serving an always-growing list of customers and leaving behind an equally growing volume of satisfied customers.

Extreme Marketers turned this asset into revenues by teaching BAJA to look forward and backward simultaneously. In addition to launching a cross-selling initiative focused on products and systems, the company launched a new program, selling service contracts to customers. This turned a "one-off" business into an "annuity." For as long as BAJA's customers lived in their homes and retained their systems, they would likely pay the service contracts, from which BAJA earned a substantial commission for doing virtually nothing. The BAJA example should prompt Extreme Marketers to look at every part of their sales continuum to identify opportunities to enrich its customer value proposition and its revenues. For example, consider offering

Customized products and services for higher-margin prices

Accelerated deliveries on made-to-order merchandise for a premium fee

Service contracts

Gift certificates

Gift certificates are particularly interesting for a number of reasons: When customers are pleased with your products and services, they will refer your business to friends and associates. The best way to encourage them to do this is to suggest that they give gift certificates on those occasions where they might otherwise give cash or a specific gift.

When customers give gift certificates to your business, they provide you with two powerful benefits:

The recipient visits your business, discovers its range of offerings, and is likely to (a) make purchases in excess of the certificate value and (b) become a regular customer in her own right.

In many cases, gift certificates are cashed in long after they are purchased. This gives your business free use of the funds extended for the purchase of the certificate. Think of it as getting interest-free loans. (This, by the way, is one of the ways American Express makes exceptional profits on the company's traveler's checks.)

A premier senior living community in Westchester County, New York, uses gift certificates as a way of turning its residents into an ancillary sales force. Every resident who encourages a friend to move into the community receives a credit of $500 on his monthly rent. Given that seniors want to have their friends join them at the residences, and that saving $500 per successful referral is a major financial inducement for them, the program is a highly successful Extreme Marketing tactic.

Chances are good that with a bit of thought and imagination, you could develop a similar program for your business. Put your employees to work trying to think of the best ideas, and reward them with paid vacations.

Extreme Marketing means using every legal tactic to achieve your goals. The goal is to get your machine running at the point where the competition stops. This excerpt is Chapter 8 of Your Marketing Sucks by Mark Stevens, published by Crown Business


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