positioning

Serious Growth Efforts: To Attract New Customers, Change Something!

by Tom Gray | on Mar 24, 2013 |  Comments

Attracting new customers in your same target market is not just a communications challenge. A little “reinventing yourself” is needed! After all, you’ve been operating in their neighborhood for years, but they haven’t chosen you! Why not? How are they meeting their needs without you? Did your message not reach them, or did they hear it but decide not to be interested?

You don’t control these growth levers like you control your price and your costs. You don’t have a relationship with these prospects, so you cannot build on it as if they were current customers. You cannot make these folks want to do business with you. Instead, you must first get them to notice you, and then get them to appreciate the benefits of your offer. This courtship takes time, perhaps three to twelve months. It’s a serious effort!

First, Find Out Why

First you need to know why they haven’t bought from you already. Do some research:

  • Are they aware of your company? If not, how do you reach them?
    • What media do they use? How could your offer stand out in that media?
    • What search arguments would they enter into Google? Do your site’s “keywords” match what they would enter?
  • Are they aware but not interested? Why not? Do they not feel the need for your solution, or do they feel the need but believe another provider has a better offer?
    • Maybe they feel that buying from you is riskier than continuing to use their current provider.

Second, Change Something!

If they have not bought thus far, whatever you are doing is not working for them. Don’t expect different results from doing more of the same thing!

  • Is your offer different enough to make them want to start solving their problem, or switch solution providers?
    • Consider your differentiation, your benefits statement (positioning), your product offer, your pricing, your accessibility, and your communications of all these.
    • Remember that your benefits statement or positioning addresses the value to the customer of your solution. Express it in customer value terms.
      • For example, “a customer might say ‘I want to protect my family if I die, but my financial circumstances change a lot and I need flexibility.’ Few customers would say ‘I need a universal life policy with a no lapse guarantee rider.’ Source: Find and Enter New Markets
    • One technique is to select a subset of prospects who share the same need/application of your product (“segment”), and target all the changes at them. For example, a special offer for seniors, or families with students, or people with older homes. You could address one new segment every six months. For more, see below.
  • Once you have a great offer, consider your credibility. Why should they take the risk of dealing with a new provider?
    • Build your credibility with a guarantee, testimonials, referrals, free or discounted samples, trials and introductory offers, and being visible helping people in your market area.
    • Visibility tactics include press releases, participation in community associations and their events, and local sponsorships. These build networks and relationships. It’s just natural to feel that “the company I know is less risky than one I don’t know.”
  • The final step to get them to listen is (naturally) communications.
    • Find out what media they pay attention to, and when, and be there then.
    • Make your message stand out from the clutter. Deliver the message using a person they can identify with, solving a problem they share. Use color. Use the Web. Engage them with something interactive, like a free online evaluation, a contest, a video, or humor.
    • Invite a response. Your message must include a call to action. A limited time offer is a  good trigger, but it must motivate them to take some kind of action: call, reply mail, email, website visit, free consultation, etc.
  • The final step to get them to buy is their experience when they reach out to meet you, come to your shop, visit your website, or call for information.
    • Take special care to design this experience especially for the new customer with that special need. Design the process and the tools, and train your people to use them well.
    • Build in a feedback loop. Ask them what made them decide to try out your company. Store that in your customer database, and tweak your offer and your communications to do more of what works!

Serious Efforts Take Serious Time

New relationships are a courtship. This is not speed-dating! You must choose the target, get to know them, modify your offer, and then find a way for them to get to know you. Expect to take three to twelve months to see the results.

Help our readers! Share your story – how long did it take you?

Tom Gray helps owners save and grow their companies. He is a management consultant focused on small business and telecom, a Certified Turnaround Professional (CTP), a Certified Business Development Advisor, and a Certified SCORE Mentor. He can be reached at 630-512-0406 or tgray@tom-gray.com. See www.tom-gray.com

Marketing Strategy and Tactics – Section 4.0

by Tom Gray | on Nov 28, 2012 |  Comments

This is the fun part! Now that you have analyzed the market, chosen a target market, and selected your differentiation, it’s time to envision how you will be perceived by the market (positioning) and how you will support that image or slogan with each of the 4 P’s:

  • product
  • price
  • place (location and distribution)
  • promotion (communications)

Later, the market description and these marketing plans will enable you to prepare a well-informed sales forecast.

Positioning

Marketing Strategy and Tactics start with “positioning.” Considering the differentiation you selected at the end of your competitive analysis, create a slogan or catchy statement that says how you want the customer to think of your product or company. It will be based on your competitive advantage, but it will be expressed in terms of the benefits that advantage delivers to the buyers in your target market.

For example, in its early years Amazon’s Kindle e-reader used the phrase “Books in 60 seconds.” This is a simple statement of the benefits to buyers resulting from its competitive advantages (differentiations) in the size of its library, the portability of the library within the e-reader, and its free wireless downloads of books. But they were not buying the size of the library – they were buying books downloaded fast. This was the benefit to them, so it became the “positioning statement.”

Later, after tablet computers were launched with e-reader applications and wireless download, Kindle was no longer very different on these features. So its positioning shifted to emphasize its non-glare screen display by adding “read anywhere” to its positioning. Again, buyers were not buying the screen technology for its internal clarity. The benefit they were buying was the opportunity to read on a screen in bright sunlight, i.e. anywhere, even at the beach or on the deck.

Aligning Goals, Strategy, and Tactics

After your insightful positioning statement, the next step is to create the big picture view: company or product goals, the strategy to achieve them, and key tactics to implement that strategy.

Your goals should be specific, both in time and in measurement. For example, “build a presence” is too vague. It would be a good goal statement if you added where, with who, when, and how much, such as “build a presence among Chicago area golfers, so that 50% are aware of the product and 25% express interest in buying it, within two years after product launch.”

I like to use a small table to match my goals to the main strategy for achieving them, and make a brief note of the main tactics I’ll use to implement each strategy. This keeps me consistent and on track, so that my efforts are focused on achieving the goals I started with. Here is a model for you to consider:

 

Goal

Strategy

Tactics
Build presence in Chicago area in two years: 50% aware; 25% interest Communication & Promotion based on local events & PR -       Communications-        Trade shows-        Demo days at courses-        Order via Website
Sell 500 units year one Presence in Pro Shops -        Direct Sales-        Discounts to sellers-        Merchandising
Sell 1000 units year two Presence in Retail chainsIntroduce  complementary new product -        Above plus celebrity endorser-        Product roadmap

 

This table provides guidance as you consider each of the 4Ps, making sure that each one not only supports the positioning but also implements the strategy to achieve the goals. Any activity that does not contribute to achieving goals or supporting positioning should not be done.

This is what Strategy is all about: allocating resources to reach goals. But strategy also means refusing to allocate resources to activities that do not enhance the likelihood of reaching goals.

The Plan’s Organization

Under the 4.0 heading, state your positioning and marketing goals. The next five subsections (4.1 through 4.5) address the 4 Ps and customer service. Section 4.6 summarizes your sales forecast.

4.1 Product Plan

You briefly mentioned product features in Section 2.2. Here is where you explain more fully any features that are significant due to difficulty, cost and competitive impact.

Next, describe the “augmented product:” those added features or services that make the entire offering more appealing, different, and valuable, e.g., packaging, choice of paint job, free installation, warranty/guarantee, user manual on a flash drive, etc.

Third, describe your set of product bundles, often three tiers of product content for three different prices. They might be named basic, standard, and premium, or bronze/silver/gold, but I’m sure you can do better than that! See Product and Service Bundles: Product Strategy | Thomas H. Gray for more on these product tiers, also called packages or bundles.

Fourth, provide a “product roadmap” It says what you will do to change the product in the coming months and years. Will there be new versions? If so, what will be their new features? Which market segments are these designed to attract? What technology advances are needed to provide these new features? When can this be introduced? Consider what competitors are likely to offer or respond with. See Product Roadmap | Thomas H. Gray.

4.2 Pricing Plan

First, show the prices of the product offers (also called packages, bundles, or tiers), and the prices for standalone services outside of these packages or tiers. Ideally, compare the price to the variable cost of the feature, and calculate the contribution margin. You will need to do this anyway for your financial forecasts.

Costs/price = margin percentage. Your product margin should be at least 50%, i.e. price should be at least twice as much as variable cost. This provides enough cash to cover overhead and still deliver your target profit.

Second, if you did a product roadmap, use a table to show price evolution per version over the next two years.

For pricing ideas and methods, see Pricing | Thomas H. Gray. Consider reactions of competitors to price changes. Will they follow? Can they afford to? What they do influences what you would do next.

Average price per product sold per month is an important input to the revenue (sales) forecast, so it would be good to state your estimate here.

4.3 Distribution Plan

Where will you sell your product? It should be where your target market likes to shop. Also, your choices should be consistent with your positioning: high end products must be sold at high end locations. Often you will choose more than one distribution channel to get broader market coverage. This means you will need to deal with price differences among channels:

  • Online: your website; catalog websites such as Amazon; other special interest sites
  • Retail: chains, independents, your own stores
  • Distributors and Agents: add expertise and network of contacts; pay commission or discount
  • Direct Sales Force for B-to-B products

For each channel, mention the price discount or commission, and estimate the % of total sales this channel will generate. This enables you to calculate sales revenue and costs accurately in the plan’s financial statements.

Describe any significant sales support costs. You incur these costs to generate more sales, by making your distribution channels more effective and more motivated. Examples could range from your website to a portal for distributors as described in Sales Support Techniques for Sales Success | Thomas H. Gray . These expenses will later be added to your financial forecast.

Finally, mention any logistics issues and costs involved with getting the product delivered from your location to the selling location.

4.4 Communications and Promotions Plan

What is the message you want to send, to whom, via what media, and what amount or % of revenue are you willing to spend? If you have new product offers directed to new target market segments, consider which media would reach them. Most small businesses today depend on their website, social media, local sponsorships and events, and inexpensive local traditional media such as coupons. A future set of six articles will provide more guidance on your Communications Plan.

The timing of communications and promotions should be estimated in this section of your Plan, because the effect of these efforts will boost revenue shortly after they begin until they end, and the costs will be incurred before they start until just before they end. These revenue and expense effects must be shown in the financials in the correct months. Obviously, if there aren’t any such effects, then the program is ineffective and should not be done!

4.5 Customer Service Plan

Customer service can be important in making the sale, by providing an accessible entry point for questions, and by referring prospects to the right channel for closing the sale. Customer service can also be critical for keeping customers and for repeat purchases. So this section of your business plan addresses accessibility, call routing/referral routines, policies for discontented customers, and customer information provided with the sale.

In order to develop accurate financial forecasts, this section will also include the cost of customer service: facilities, staffing, training, and reference materials.

4.6 Sales Forecast

This section will be addressed in the next article.

Tom Gray helps owners save and grow their companies. He is a management consultant focused on small business and telecom, a Certified Turnaround Professional (CTP), a Certified Business Development Advisor, and a Certified SCORE Mentor. He can be reached at 630-512-0406 or tgray@tom-gray.com. See www.tom-gray.com

 

 

Competitive Analysis and Differentiation: Be Different or Be Gone!

by Tom Gray | on Feb 19, 2012 |  Comments

The most important reason to do competitive analysis is to find your differentiation. Every company must have an edge – must be different from competitors, in a way that matters to prospects. If your company does not meet customer needs better than other available choices, there is no reason for the customer to choose to buy from you.

Without a reason to buy from you, you have no business! Customers will not buy, and bankers will not lend. Bankers will lend only to those companies who seem to be different in a way that matters to customers when they are choosing a supplier.

So your company has to be different. It must enable customers to meet their needs better than if they bought from others. But there is also this other idea – “different in a way that matters.”

What Matters to Customers when Choosing Suppliers?

Figuring out what matters to customers – their buying criteria – starts with understanding who your target market is, and then understanding their thinking about what they need in your product. For example, when someone is thinking about buying an e-reader, their choices include Kindle or Nook or a tablet computer with an e-reader app, and perhaps a few other less well-known e-readers. How do they decide what to buy?

They think about (make a mental list of) what the e-reader must deliver. For example, they will want a glare-free display, color display, large library of books (maybe children’s books or textbooks?), a reliable unit with decent battery life, a reputable supplier, easy book ordering, protection if things go wrong, and of course an attractive price considering the value received. For some, other features may be more important than some of those listed above, such as text to speech (“read-to-me”).

Humans cannot assess products on dozens of factors. Five to seven is our limit, and maybe seven is too many! Thinking like a customer in your target market group, organize these buying criteria into priority order, and stop at 7 (or 5). You may want to group some items into a broader category such as “ease of use”. This becomes your test list.

Now you will want to talk to some of these target customers and see if you guessed right. Note: don’t ask current owners; they know too much! Ask people who tell you they are considering buying an e-reader but have not done so yet. Find them at locations where the units are sold, and strike up a conversation. Maybe you can find such research on the internet, or pay for your own survey or focus group.

Once you have a reasonable set of buying criteria in priority order, then you can assess how well the competitors meet each of these criteria. For those criteria where no one meets them well (no competitor is rated “high”), that is where you must be high – this will be your differentiation.

Summary of the Process

There is a logical train of thought here:

  • You define your target market so you can think like them about their buying criteria.
  • Then you assess competitors on those criteria and find your differentiation.
  • It is something that matters to prospects because ideally it is one (or two) of their top 5 to 7 buying criteria.
  • Having this differentiation, you have a reason to be in business!
  • Next you must figure out a “positioning” slogan: how you want the customer to think of your company. It will relate to the differentiation, but expresses customer benefits in a catchy style.
  • Once you have your positioning, you can develop your marketing program (the 4Ps), where every tactic must support this positioning.

Have you ever found an easier way to do competitive analysis and find your differentiation?

Tom Gray helps owners save and grow their companies. He is a management consultant focused on small business and telecom, a Certified Turnaround Professional (CTP), a Certified Business Development Advisor, and a Certified SCORE Mentor. He can be reached at 630-512-0406 or tgray@tom-gray.com. See www.tom-gray.com

Competitive Analysis

by Tom Gray | on Feb 18, 2012 |  Comments

Once you know your target market’s top 5 to 7 buying criteria in priority order, you can assess the competition on how well it meets those criteria. See Competitive Analysis and Differentiation: Be Different or Be Gone!

Then you can plan to be different – to be excellent on some criteria that matter to customers where the competitors generally fall short. The final step is to capture your differentiation in a marketing slogan or “positioning” – what you want customers to think of when they hear your name.

Competitive Analysis In Your Business Plan

Start with two to four paragraphs describing the offerings of competitors today, and any improvements they are likely to introduce. In your narrative, be sure to highlight their offering in terms of the buying criteria.

Then set up a table called the Competitive Analysis Matrix. You could copy and paste the one below, and then edit it for your business.

You will have one row for each of the buying criteria, and one column for each competitor or group of competitors. Four to five columns is enough. By the way, “price attractiveness” is never the first buying criterion. The first one is most important, so it must be something about how the product meets a need, such as its functionality. After that, people might consider price. If it does not do the job, the price does not matter!

Then, in each cell, enter the consumer’s perception (not your perception, but what you think is their perception) of how well each competitor meets each buying criteria by entering H (high), M (medium), or L (low).

You will use three extra columns at the right end of the table: common shortfalls; my product; my strategy.

  • Under “common shortfalls”, enter an X for a buying criterion where no competitor is rated H.
  • Under “my product”, enter how you expect prospects will rate your product. Be realistic!
  • Finally, under “my strategy”, enter a word or two saying why you will be better than competitors on that criterion (e.g., “add color”).

Review the table to compare the ratings to each other. Modify them if needed to be sure you can explain and defend them. Review the three columns on the right; are your entries accurate?

The last step is to write a short paragraph stating your differentiation from competitors – your competitive edge. Obviously, make sure your words match what the table says. This is why they will buy your product. This is what a lender is looking for!

Positioning

Positioning  is a marketing slogan that captures your differentiation and expresses how you want to be thought of by prospects. Your slogan will be positive, expressed in terms of customer benefits – prospects will think of your company as one that offers value and perhaps good experiences.

Think of several possible slogans and try them out on friends. This is a big decision, because it drives all your marketing, so take your time to find something that makes customers (and you) feel good about your firm.

By the way, always use “price attractiveness” rather than simply “price.” Why? You want all your High ratings to be considered good. High price attractiveness is good, but a high price is bad.  So using “price attractiveness makes all your ratings consistent: high is good; low is bad.

Competitive Analysis Matrix Example (in two tables for blog space limitations)

Buying Criteria Ajax Co Sell-Co Big Bertha Also-Rans CommonShortfalls
Performance M M M L X
Durability H L M L
Price Attractiveness M M L H Almost
Fit with other tools M M H L
Company Reputation M M H L
Order/delivery M M L M X
Easy Training M M M L X

 

BuyingCriteria CommonShortfalls My Product MyStrategy
Performance X H ComputerControlled
Durability M Perf more important
Price Attractiveness Almost H Low Overhead
Fit with other tools L Our line will grow
Company Reputation L Startup needs references
Order/delivery X H Web, plusPerson option
Easy Training X H On-line

 

This table shows a startup firm whose edge is computer-controlled performance for some type of tool.

  • The firm will enter the market as an unknown, supported by references.
  •  Its appeal (differentiation) will be unmatched performance and attractive pricing for that level of performance, which can save money for its clients.
  • It is easy to do business with, but suffers from lack of a broad line of tools that work well together.
  •  It has also decided to be middle-of-the-road in durability to control costs, believing that its performance advantage will outweigh any durability disadvantage.
  •  Ajax is competing on durability and a price below Big Bertha. Sellco is a third place firm, and Big Bertha is the leader based on its broad line and established reputation.

A possible positioning slogan: “Cut your costs with the newest cutting edge.” This starts with positive customer benefit, and highlights the performance (cutting edge) of our product. It touches on how the customer can reduce his own expenses by using a high performance tool (for example, there may be no need for him to deburr and polish if he uses your machine). It also suggests that your price might be lower than average.

You will want to create your own buying criteria to fit your market and product, but here are some generic criteria to jog your thinking:

  • range of products
  • quality (hard to differentiate until AFTER one buys)
  • selection
  • service
  • reliability
  • stability
  • expertise
  • appearance or style
  • sales method
  • credit policies
  • advertising
  • image
  • ease of use
  • company reputation
  • durability
  • fit with other tools
  • training requirements

The Competitive Analysis Matrix is a simple tool to sum up the market (customer buying criteria and how well competitors meet them), choose your differentiation, and then your positioning. For a short video on how to do this, go to Competitive Analysis: Find Your Edge – YouTube.

How did this work for you? Did it organize your thinking? Was the effort worthwhile?

Tom Gray helps owners save and grow their companies. He is a management consultant focused on small business and telecom, a Certified Turnaround Professional (CTP), a Certified Business Development Advisor, and a Certified SCORE Mentor. He can be reached at 630-512-0406 or tgray@tom-gray.com. See www.tom-gray.com

 

Service Design and Positioning: Product Strategy

by Tom Gray | on Jan 24, 2012 |  Comments

Service Design is not quite the same as designing a physical product. If your product strategy involves designing a service, you must design the customer experience to fit with your positioning. Start by listing each step of the customer’s encounter with your service. For example:

  1. Become aware the service exists
  2. Research providers
  3. Buy, order, register
  4. Arrive, welcome
  5. Receive service
  6. Depart
  7. Follow-up

Service Design Starting Point: Your Differentiation and Positioning

Earlier you researched customer preferences and how well the competitors meet them, and selected your special competitive edge – your differentiation. See Competitive Analysis and Differentiation: Be Different or Be Gone! If you are not different – better – than your competitors on something that matters to customers when they are deciding to buy, there is no reason for your business to exist!

Then you created a benefit-focused way to express how you are better – your positioning. This is a marketing statement that you want prospects to think of when they think of you. Pepsi’s differentiation was sweetness. Young people prefer sweeter drinks. So they chose “the Pepsi Generation” as their positioning. They pictured young people having fun while drinking Pepsi; everyone wants to identify with young people having fun!

Maybe you are offering financial management advice. Competitors make it seem complicated, so you choose positioning based on simplicity – everyone wants some simple techniques to manage their finances.

Designing the Experience

Design your service by desigbning the customer experience. The key concept is this: support that “simple” positioning in every step of the customer’s experience.

  • For awareness, make sure your website appears when they “google” simple financial management.
  • When they do their research, make sure your website and your brochures offer a simpler structure than competitors, with tables, clearly-labeled techniques, and a step-by-step process.
  • When they are ready to sign up for your seminar, make it easy. Don’t ask for too much information, and provide a way for them to talk to someone to see if the seminar will fit their needs.
  • Make sure directions to the site are clear.
  • When they arrive, the signage should be clear. Someone should welcome them in a way that calms any fears and encourages questions.
  •  Delivery of the service – the seminar itself – should stress simple techniques, offer easy to follow materials, and simple “next steps” such as personal counseling and instructional materials. The overall message fits your positioning: “everyone can do this.”
  • When the seminar is over, they should leave with a clear idea of what to do next, some simple “takeaway” materials, and a clear mission for their next steps. Thank them for coming and promise to be available to help.
  • Then follow up quickly and once more a little later on, with a message of interest and assistance.

Designing every step of your service to support your positioning communicates your “edge” through every element of the customer’s experience with you. Words are a start, but the experience is crucial to make the words come true!

When you looked at your service design to make the customer experience fit your positioning, what did you decide to change?

Tom Gray helps owners save and grow their companies. He is a management consultant focused on small business and telecom, a Certified Turnaround Professional (CTP), a Certified Business Development Advisor, and a Certified SCORE Mentor. He can be reached at 630-512-0406 or tgray@tom-gray.com. See www.tom-gray.com.