Our revenue is up but our margins are down. Depending on whom you ask it’s not a problem. But if you’re the owner – or if you’re compensated based on margins – it is!

What does this tell you?

Most owners say it’s the sales reps’ fault; “they’re giving business away.”

Sales reps say ownership has an outdated view of the market and how competitive it is out there.

Who’s right? They’re both right!

Higher revenue and lower margins are a symptom. They are not, in themselves, the problem. They’re a symptom of the commoditization of your products or services. That’s your problem!

So how do you fix this?

Simply said, you have to “de-commoditize” your products or services.

How do you do that?

By providing something that separates you from the rest of the market!

How do you not do it? By saying you’re worth more because you have “better service,” or any other cliché that everyone else says. In fact, if you want to separate yourself from your competition so that you are not commoditized, you need to move in exactly the opposite direction of your competition in every aspect. To the degree you all say and do the same things, you will be lumped in with them and therefore be commoditized, causing lower margins.

Differentiation Questions

• How do you differentiate?
• What sets you apart?
• Why are you worth more?
• Why should a prospect choose you instead of your competition?

They are all valid questions, and ones you need to ask. But don’t ask them of yourself.

Go ask your clients who are paying more for your products or services; they’ll tell you. Then, take that message and embed it in your brand. Get your marketing team to drive this message throughout every marketing message. Train your staff how to sell based on this messaging, and then deliver on it consistently.

What happens if your clients who are paying more can’t tell you? I guess it’s either a) get used to lower margins or b) figure out what the market is lacking and fill that gap, providing those differentiators, then your margins will go up.

So I would ask you: How do you separate and how do you communicate this to your market?

Brian

One cannot pick up a business periodical, watch a business channel, or go to a seminar these days without encountering the subject of “diversification.” It seems everyone is trying to develop a new go-to-market strategy and there is no shortage of “experts” willing to talk about it.

Michigan automotive suppliers are looking to diversify into medical, aerospace, defense or alternative energy and therefore need a new go-to-market strategy. Thousands of individuals who have been laid off are dipping their toes into the entrepreneurial pool and need to develop a go-to-market strategy for their new businesses.

Whether you are a 100-year-old company trying to diversify your client base or a 1-day-old company trying to launch, the term go-to-market strategy sends shivers down the spines of those who must design and execute them.

So what is a go-to-market strategy and why do you need one?

Let’s tackle the second question first. You need a go-to-market strategy to decrease the likelihood of failure or to increase your likelihood of success, depending on what drives you – fear of failure or drive to succeed. You need a go-to-market strategy to know what you are selling, to whom, how and why. Without this basic strategy in place, you are no doubt doomed.

What is a go-to-market strategy?

Wikipedia defines go-to-market strategy this way: “The channels a company will use to connect with its customers/business and the organizational processes it develops (such as high tech product development) to guide customer interactions from initial contact through fulfillment.

“A firm’s Go-To-Market strategy is the mechanism by which they propose to deliver their unique value proposition to their target market. That value proposition is based on the choices the business has made to focus on and invest in markets and solutions that they believe will respond positively to the increased attention.

“Marketing Strategy involves WHO the firm will go after and WHAT it will offer them. Go-To-Market strategy is a component of the overall marketing strategy and is concerned with HOW the firm will make it happen.”

So, without a go-to-market strategy you cannot say who you are going after, what you are offering them or how you are going to go about converting them to your product or service.

But, how to you go about building your go-to-market strategy? You can hire some high priced consultants to help you through this process or, if you don’t have the resources to do that, I suggest assembling the best and brightest people from your staff and other trusted advisors to help you answer some initial questions that will get you headed in the right direction and increase the likelihood of getting to the right answers.

Let’s take a common one that many of our manufacturing clients in Michigan have been facing for years. Let’s say you’re in automotive and you want to diversify into the medical market. Even though this may not be your exact situation, you can use the questioning sequence below to craft your own questions based on your unique circumstances.

Defining the Market

• Who is considered to be part of the medical manufacturing market?
• What are the barriers to entry into this market?
• What is the geography of that defined market?
• What limitations or considerations do I have in working in that geography?
• What are the names of the companies that are part of this market?
• What is/are the buying criteria of this market – the requirements?
• Who are the decision makers within the companies that are part of this market?
• What is the decision-making process within the companies that are part of this market?
• To whom are my competitors already selling within this market?
• What are the competitors’ advantages / disadvantages relative to me and my offering?

These are baseline questions, each with many sub questions, to ask in order to begin defining what the market looks like and how to approach it. To define your target market further, ask questions directly related to your products or services.

• What proportion of your target market has purchased a product similar to yours?
• From which competitor?
• Why?
• At what price?
• What was the delivery and install like?
• How was the account serviced after the install and training?
• What could have been done better?

Then, make projections about your target market to determine impacts to your business in this market based on various factors:

• How much of your product or service might your target market buy?
• What proportion of your target market might be repeat customers?
• How might your target market be affected by demographic shifts?
• How might your target market be affected by economic events?
• How might your target market be affected by larger socioeconomic trends?
• How might your target market be affected by government policies?

The answers to these questions will give you a glimpse into potential obstacles to address before entry into a particular market.

What is the best way to obtain answers to these questions? If you have the budget for it, the easiest, most efficient and most thorough way to get this data is to use a market research firm. Market research firms are uniquely equipped to find this data and report it to you in an efficient manner. You may also consider contacting your local university’s business department and find out if a professor is willing to make this research a class project.

If you wish to do the research yourself or with existing staff, there are resources available, such as reference librarians at the local library, Department of Commerce field offices, business libraries of local universities and colleges, local SBAs, and of course, the Internet.

With these baseline questions asked and answered – and the appropriate data obtained, quantified, and recorded – you will have some of the necessary information to develop your go-to-market strategy. In addition, you’ll have data for developing your marketing and sales plan for entering the new market or launching the new product or service.

The key is asking the right questions and then researching the right answers. The “right” answers, in this case, will be based on fact rather than emotion. If you stick to this, you are surely furthering the likelihood of success with your new strategy.

What are your thoughts on this approach? What questions am I missing? What are some other components you have used to develop go-to-market strategies?

Brian

Companies spend incredible amounts of money promoting their brands through tools such as brochures, websites, social media and advertising. But have you as a business owner ever wondered what members of your sales team are promoting when they’re in front of your clients or potential clients?

I have asked numerous clients through the years, “What are your sales people doing in the field day-to-day and what type of image are they projecting to the market?” More often than not, the answer is, “I’m not sure.”

There are great tools that many companies use to track activities and the results of their sales programs. But how do you know – really know – how your sales team is promoting your company?

The best way I know of is getting out of the office and spending time in the field on live sales calls with your sales team. This tactic provides the best picture of how the team is promoting the company. Sure, these sales calls are somewhat influenced by the fact that someone is observing, but they still give a good baseline understanding of what is occurring from a promotional aspect between the sales team and the clients or prospects.

I have seen other tools, such as well-worded customer service or problem resolution surveys, that could be adapted to capture client feedback on what your sales team is promoting. Have you tried this? What were your results?

Have you ever scheduled phone calls or face-to-face field calls for just you, the owner, to meet with clients in order to get feedback on how your sales team (or your company overall) is doing? What were your experiences? How valuable was the information? How did you use it to make changes within your organization?

The secret shopper technique is one that I have seen executed pretty well in retail environments over the years. Have you used this in your organization? For those of you in field sales, how have you adapted this technique to your situation?

Bottom line: I think business owners have a responsibility to know – truly know – how their sales teams are promoting the company and what type of image they are portraying. If it’s not what we want it to be, we need to come up with a plan to change that, whether through training or tools or whatever.

What do you do to inspect what you expect of your sales team relative to company promotion?

Brian

Public relations, affectionately known as PR, can and does have an impact on companies’ sales programs every day of the year. And not just in the ways that might seem obvious.

Publicity

This is the public relations discipline that is best known and most popular among sales and marketing professionals. PR people use their media contacts and savvy to secure story placements about their companies’ products and services. These placements can then be reproduced and added to sales presentation binders, attached to company websites and e-brochures, and included in direct mail initiatives to current and prospective customers.

So that’s the obvious benefit of public relations for sales programs. But consider:

Community Relations

PR initiatives in the community – things like sponsoring events and contributing to and participating in community projects – have long been placed under the umbrella of corporate citizenship. Which they are, of course. But these initiatives also contribute to brand development and goodwill among clients and prospective clients. All other things being equal, people are more inclined to do business with a company involved in their community than one not involved. This applies, incidentally, to both B2B and B2C enterprises.

Internal Communications

Never underestimate the evangelizing power of a well-informed staff. Employees who are aware of what’s happening in their companies are more engaged. And those who are more engaged are more likely to be watching for business opportunities for the company – whether they work in sales, accounting, operations or HR! This is why good internal communications programs include a business referral reward component.

RFPs / Proposals / PowerPoint Presentations

In many companies, especially smaller ones, these business acquisition documents are under the sole purview of sales. That’s a mistake. Public relations professionals bring the power of effective communication to the party, meaning they can help define and refine sales messages specifically for the prospective client. PR professionals understand that rarely should there be a one-size-fits-all solution for any of these pieces. (And no, just changing the prospective client’s logo on the cover or intro slide doesn’t count as customizing!)

Marketing Communications

Here, too, some companies make the strategic error of including technical experts, sales and IT professionals in the development of brochures, sell sheets, websites, e-brochures, white papers and other client-facing marketing materials, at the exclusion of PR. All of those areas should be represented, of course. The mistake comes when professional communicators are not included in the development of these critical assets. Why? Just because someone is a technical expert on your product, for example, does not mean she is adept at articulating the product’s features, advantages and benefits in a way that is meaningful for prospective clients. As with proposals and presentations, PR can bring focus and consistency to company messages, making them resonate with prospects.

This is just a smattering of the ways PR supports sales; I could go on.

Instead, though, I’d be interested in your perspective. How does PR support sales in your organization? If you’re a PR practitioner or consultant, how have you made a quantifiable difference for your organization?

It’s all about return on investment, right? What’s the biggest or best return you’ve been able to produce, and how did you do it?

Mike

One of the annual conundrums faced by businesses of all sizes is determining how much money to spend on marketing and, by association, advertising.

The underlying question: will allocating dollars to marketing have an impact on sales, and, if so, how much of an impact? Mostly because measuring return on investment is so difficult to do, the debates rage. I’ve worked with CEOs of multimillion dollar companies who were extremely stingy with their marketing budgets. “After all,” they would say, “that’s what our sales reps are for.”

The logic in those cases was that wasting money on excessive advertising or marketing initiatives will have no impact if the sales team cannot sell. This is true, at least to an extent. But what if the sales team can sell? Doesn’t it make sense to grease the skids for them?

All other things being equal between your offering and a competitor’s offering, doesn’t it make sense to prime the pump with marketing and advertising? I think the answer is yes. Absolutely. But not just for the impact that marketing can and does have on the decision maker or end user.

I believe that, generally speaking, there are two audiences for marketing and advertising: external and internal.

Marketing is usually viewed only with an eye toward external audiences. How many prospective customers can I reach with this ad buy? Is our value proposition stated clearly and compellingly enough in this brochure to drive business? Do our micro sites segment customers in a meaningful and intuitive way?

This is a fair – if myopic – view of the world.

I would suggest that companies keep in mind the internal audience for marketing, as well. In this case, I’m thinking specifically about the front-line sales team that benefits from the expenditure of marketing dollars. It may be true, for instance, that a company cannot directly track a certain sale to a particular ad flight.

But even if that is the case, it may very well be true that the ad flight contributed to brand awareness, which contributed to the sales rep’s ability to secure the appointment, which contributed to the rep having the opportunity to present, which ultimately enabled the rep to close the deal.

Similarly, it may be true that a customer answering a new client survey question about the convenience of your sales process wouldn’t think to mention the role played by a brochure in answering their questions, or a white paper in providing them comfort with the credibility of your company.

But even if that is the case, it may very well be true that either a) those tools had an impact on the prospect’s decision “somewhere in the margin,” or b) the tools gave the sales rep extra confidence in her presentation because they helped her remember key benefit statements, or they reinforced certain features in the customer’s mind after the representative had finished her presentation and left.

So, how much should a company spend on marketing and advertising? Hard to say. Most expert opinions I’ve seen range from 1 or 2% of a company’s pre-tax revenue to upwards of 10 or even 20%, depending on how new the company is, how much marketing it’s done in the past, where its product is in its lifecycle and what industry the company is in. That’s a debate worth having in earnest in your conference room.

But does marketing and advertising have an impact? Without a doubt. I don’t think there’s any room for debate on that question.

Is there?

Mike

Social media gets a lot of ink – or bytes – these days as a method of communication for companies. If you’re looking to spread the word and build a true community of customers, Facebook, LinkedIn, Twitter and their electronic brethren make a lot of sense.

Likewise, advertising and marketing communications have well-deserved spots in the toolbox, for the good they do in building brands and communicating benefits.

But there’s one tool that frequently beats them all, at least from my point of view: publicity.

Why is this so, and why should it matter to an organization trying to build sales? Because publicity that is properly conceived, strategically developed and carefully placed brings with it something that none of those other tools do – the implied endorsement of an authoritative and objective third party.

Consider a manufacturing company bringing to market a unique diagnostic tool that can be used by automotive mechanics to extend the life of an average engine by up to 20%.

Marketing professionals can help by purchasing ad space in carefully selected publications or on websites and blogs read by their target audience of automotive maintenance facility owners and managers. Nothing wrong with that.

They also can develop marketing collateral materials such as brochures, sell sheets, case studies, white papers, testimonials and a variety of other tools. Nothing wrong with that, either.

And social media can be extremely helpful in leveraging networks to create positive buzz. That’s great.

But consider the additional credibility that would accompany a story on the topic of innovative automotive engine maintenance, featuring the company’s product.

Odds are good that, in addition to a description of the product, the name of the manufacturer and a quote from the CEO of the company, the story also would include comments from an industry expert or other credible person, adding immeasurably to the credibility of the message.

Whether the publication officially “endorses” the product is really beside the point. There’s an unspoken, “implied” endorsement that comes with being included in a story, especially if it is in a reputable business or trade publication of record.

Of course, the risk is that a competitor or industry expert, or the reporter doing the story, don’t share the glowing assessment of your product, and choose instead to trash it. At the end of the day, that risk is why there is so much potential reward in properly executed publicity. (And it’s why you should never prematurely attempt to place a story, before your product or service is ready for a proper coming-out party.)

Publicity is measurable, adds credibility, and, once reprints are prepared and distributed, gives sales professionals a terrific set of talking points and an automatic leave-behind to use with prospects.

What do you think? Is publicity as powerful as I say? Does the potential risk outweigh the reward? Do you have a publicity success story?

Mike