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four pillars of business success

Marketing and Sales

 

Business success pillar: marketing and sales

The second pillar for small business success is ‘marketing and sales’.

You can have the best product or service in the world, but if you are not making sales your business will not survive for long.

Every business has to make sales to survive and prosper. If you are not making sales, you are doomed to failure.

Marketing and sales is all about:

  • having products or services that your potential customers need and want,
  • having the right price,
  • using the right promotional tactics so that potential customers find out about you and current customers keep coming back,
  • converting leads into sales, and
  • having the right distribution channels to deliver your product or services; this is what business development is all about.

Ongoing business development activities, i.e. marketing and sales, are vital to both short term and long-term success.

The Difference between Marketing and Sales

While often referred to interchangeably, and both lead to the goal of selling products or services, marketing and sales are two different concepts.

I think this is a simple way to differentiate sales and marketing:

  • Sales is getting the customer to part with their money to invest in your products and/or services.
  • Marketing is a process of attracting, educating and creating interest of prospective customers in your products and/or services.

If you want a longer definition the Business Dictionary provides a good explanation that you can link to here.

 

Marketing

 

The Keys to Successful Marketing

Marketing combines a mix of elements that are often referred to as ‘the 4 P’s’ or the ‘marketing mix’:

  1. Product: the products and services that you offer.
  2. Price: the pricing strategy for your products and services including factors such as discounting, credit terms etc.
  3. Place: where prospective customers can see, buy and get hold of your products and services. It might involve a physical location, an e-commerce site, third-party distributors and so on.
  4. Promotion: the activities that make potential consumers aware of your products and/or services.

Target Market

In order to fully apply the 4 P’s, you need to identify your ‘target market’.

I mentioned earlier about attending s seminar by Michael Gerber. I recall him defining marketing as being all about:

  1. Demographics – who is your customer,
  2. Psychographics – why do they buy.

Your target market consists of the people who will benefit the most from your products or services. This is your ideal customer. It’s not someone you hope you’ll be able to sell to, but a person who is a good match for what you’re offering. If you can clearly identify this person, you know exactly who you need to get your message to. This then maximizes the effectiveness of your marketing efforts.

Create an Avatar of your perfect customer

To define your target market, create a profile for an individual who would be the perfect match for your products or services. This is sometimes called an ‘avatar’.

This profile should include basic demographic information such as age, gender, location, socioeconomic status, lifestyle, family structure, etc.

It should also include psychographic information to help identify why they would buy your products or services For example, what are they worried about, what are they afraid of, what problems do they face, what are their values, likes and dislikes, shopping habits, worldview, etc.

Here are some simple questions you can ask to get started identifying your target market:

  • Who are they?
  • Where are they?
  • What do they need?
  • What problems do they face?
  • What do they buy?
  • Where do they buy it?
  • How often do they buy it?
  • How do they make their buying decisions?
  • What is the best way to reach them with your marketing message?

In creating this profile, be as specific as possible. Your business should not and cannot be all things to all people. You’re looking for the perfect match.

If you have more than one ideal customer, make a profile to define each unique segment of your market. For example, your offerings may be of value to people in two very different demographics. If this is the case, split your target market.

 

Why Should I Do Business with You?

Every business should have a unique value proposition (UVP). This is a statement that says clearly, thoroughly, and concisely what value you offer and how it’s different from the products of others.

Your UVP shouldn’t say that you’re the best at something, but that you’re the only business in the market who does it in this particular way. The UVP explains why your offering is the only one that makes sense for your customers.

Writing a unique value proposition is no easy task. It takes quite a bit of refining until you get it right. Start by brainstorming and answer these questions:

  • What is unique about your offering?
  • What specific problem does your offering solve and how?
  • What are the key benefits of your offering that no one else gives?

Your business doesn’t have to be the first one to ever offer a particular product or service. Instead, your product may be unique because it combines two ideas or presents an old idea in a new way. It may be unique because it’s the only product of its type aimed at a particular segment of the market. Brainstorm to reveal the uniqueness of what you offer.

 

The 4 P’s of Marketing

 

4 P's of marketing

Let’s look at the marketing mix (i.e. the 4 P’s of marketing) in more detail.

Product

What products or services will you offer to your target market? How do your products and/or services address the problem of your business market or niche?

  • What problems do they solve?
  • How are they different?
  • What benefits does they offer?

This includes functionality, quality, appearance, packaging and warranties. To consider this, you must go back to the questions of ‘who is your target customer?’ and ‘why do they buy?’.

For example, if your target customers are in an affluent demographic, the reasons why they buy are likely to be significantly different to those in a demographic that is less well off.

As a generalization, the more affluent demographic will be more influenced by quality, packaging and appearance whereas the less affluent demographic will be more influenced by price.

Selling business to business

If you supply products and services to business, your products or services will be different if your target customer is a large business than if it is a micro-business.

For example, in the accounting ‘industry’ there are top-tier firms that have a different range of products and services (and significantly higher charge-out rates) than smaller firms because their target markets are different. Top-tier firms focusing on the top end of town and smaller firms on more local clients. But even among small firms there are differences, with some positioning themselves as tax and government compliance experts, others as small business consultants or experts in particular industries and more.

What do consumers typically hate about dealing with your industry?

I have worked with a number of clients over the years in the plumbing and electrical trades. One of the questions we ask is: what is it that customers hate most about dealing with a trade person? The answers often came back to not arriving on time and leaving a mess when they are finished. So, they changed their ‘product’ by offering an audacious guarantee about arriving on time and not leaving any mess. This enabled them to promote a unique value proposition and increase their prices.

There are many more examples like this and it all gets back to these questions:

  • Who is your target market?
  • Why do they buy?
  • What problems do your products solve for your target customer?
  • How are your products or services different?
  • What benefits do your products offer?

And think outside the box:

  • Can you reposition any products or offer additional benefits to meet new opportunities?
  • Could you bundle products to add perceived value to your offers?
  • Can you add a special feature that competitors do not offer?

Price

Price is one of the most pressing and challenging issues small business owners face. What do you charge for your products or services?

This decision can be agonizing!

  • What if your price is too high and nobody buys?
  • What if your price is too low and it looks like it’s cheap?
  • What if your price is too low and you don’t make enough sales to cover your costs?

Price is vitally important whatever you are selling and small variations can significantly affect results.

Price is the factor that has the largest impact on sales and profits.

Consulting firm McKinsey & Co. studied Global 1200 companies and discovered that if they increased their prices by just 1% while demand stayed constant, on average profits would increase by 11%. This small change in price for their customers resulted in a colossal change for the companies themselves. How would raising your prices by 1% help you?

An effective price strategy will help to increase short-term sales as well as long-term profitability. The key is to understand the fundamentals of pricing and the value your products and services you provide to your target market.

Pricing products effectively helps you:

  • Meet or exceed your revenue targets
  • Remain competitive by pricing your products relative to your competitors
  • Retain or increase your market share
  • Maintain customer loyalty and keep your customers buying from you no matter what changes in the market
  • Preserve your image and reputation as a business that offers quality products at an appropriate price.
Setting the Right Price

Setting the right price is a process of:

  • Identifying your target market as we have previously discussed
  • Researching your competitors as well as market trends to ensure your prices are competitive
  • Positioning your product or service by identifying your unique value proposition and building your image appropriately
  • Exploring a mixture of pricing strategies to decide the ones that work best for you
  • Monitoring your results in order to keep your prices current and appropriate
  • Understanding when to increase or decrease prices and how best to take advantage of these techniques

Place

‘Place’ relates to how your customers find and visit you to access your products and services, and relates to both online and offline.

Ease and convenience are major factors that influence potential customers and critical to your ‘place’ decisions.

For some offline businesses, being visible to a major traffic route can be important. The location of suppliers and competitors, being easy to find and ease of parking can also be factors.

Distribution is also a consideration of ‘place’. Options include supplying to your customers directly or having a network of wholesalers and retailers who also distribute your products. Depending on your business, warehousing, drop-shipping, postage and packaging and other distribution decisions also come into play.

The sort of questions that need to be considered are:

  • Where do people expect to find and therefore look for products or services like yours?
  • What kind of business or shop sells products like yours?
  • What channels do you need to distribute your products and services and how can you access them?
  • Can you sell directly, or do you need a network to help you sell?
  • Where and how is your competition selling their products?

Promotion

Promotion relates to the activities that are intended to make potential consumers aware of your products and/or services.

This is all about getting the right message to the right market using the right media.

Once again we come back to the importance of identifying your target market and your unique value proposition.

By focussing your promotion on your target market, you can be very specific in crafting your message and selecting the right media. As a result, your promotion will be a lot more effective than a scattered approach.

Alternative Promotion Tactics

When it comes to promotion, there are two types of tactics.

The first is called ‘Outbound’ and this focuses on getting the marketing message in front of people. It includes a lot of the conventional approaches such as television, newspaper and magazine advertising, direct mail, telemarketing, trade shows and other events.

The second is called ‘Inbound’. This focuses on garnering the interest of your potential customers and is a lot more covert than outbound methods. Inbound tactics include educating potential customers on sites like YouTube and blogs, sharing relevant content on social media, attracting prospects to ‘opt-in’ for your newsletters, and making sure you can be found online with a SEO optimized website and social media presence.

‘Inbound’ has grown in popularity because it can be significantly cheaper than traditional forms of advertising. It is also a lot more covert as people do not perceive they are being marketed to and matches the culture of today where people’s buying decisions are influenced by content they view online.

However, the aim of marketing is to move people from being prospects to becoming customers or clients. This is a downside of ‘inbound’ as while it builds relationship and trust with your audience, it is often not enough to convert prospects into clients. Consequently, effective marketing will generally require a mix of both inbound and outbound tactics.

For example, your social media activities may be supplemented by an advertising campaign. You might also use ‘remarketing’ strategies online that allow you to display ads with offers to potential customers who have shown interest in your business before, such as visiting your website, making a purchase, shown interest in a social profile and so on.

Another strategy is to use your inbound marketing activities to get prospects to opt-in for a free offer such as a report or your newsletter, and then use email marketing to also promote your products and services.

We stressed the importance of identifying your target market – your ‘avatar’ – throughout this presentation. The secret when it comes to marketing is to test in order to find the tactics that work best with your target market and match that to the right media, which might be offline as well as online. Determine what your message will be and what marketing channels are best in reaching your market.

It’s important not to have all of your eggs in one basket because some promotions will fail or become less effective over time. Plus, you do not want to be at the mercy of one strategy or one media provider.

 

Sales

Sales

A lot of business owners dislike the idea, and are often scared of selling. Unfortunately, selling is a task you cannot avoid because if you don’t get sales, your business will fail.

And that is the case whether you are selling online or offline.

When you make a sale, you are actually providing your goods and services in exchange for the money your customer pays you.

Think of it this way:

  • You are actually solving a problem for your customer
  • You are providing a valuable service to your customer

Your goal is to provide what’s best for your customers, and you need to make the sale first in order to help them.

Selling must always be customer focused because it is about matching your offer to your customers needs.

Your task is to help your customer make the right decision – for them.

Think of it this way: you are not selling to the customer; you are serving them.

Propose the best, most relevant solutions and focus on developing deeper relationships with your ideal customers to promote ongoing relationships and referrals.

You don’t have to be a ‘natural salesperson’.

You can learn the skills and get good at it. Those skills include:

  • Listening: Active listening is the single most useful and important skill you can use when you want to build a relationship and make a sale. Active listening demands focus, concentration, and mental effort.
  • Effective questioning: This goes hand-in-hand with active listening. It also needs preparation as you need to think about the type of questions that will be the most effective as you initiate conversation, explore needs and test readiness to buy.
  • Educating: Educating means giving your customers all the information they need to understand what you’re selling, so they can feel confident they are making the right decision.
  • Collaborating: Collaboration skills are important because selling isn’t a battle of wills. You are side-by-side with your customer working towards the same goal, which is to get to the right decision. Buyers are invested in the outcome and will welcome your help if you’ve established a good relationship with them and they trust you.
  • Communicating Value: Value is different for each person. It’s based on the needs and desired outcomes of the individual. You must communicate the value of your offer so that your prospect recognizes how it will help them.
  • Coaching to a Decision: This is when you ask your prospect to make a decision. If you think of yourself as their coach, you will feel more confident about closing the sale. If you’ve used your listening and questioning skills effectively up to this point, you will know when your customer is ready to make a decision. Their goal is to make a good buying decision and, as their coach, you share this goal.

Remember: every business is a ‘marketing business’. Marketing and sales are vital to your ongoing business success.

Let’s move onto the next foundational pillar of business: Business Fulfillment.
 

 

The video presentations on this page contain images that were used under a Creative Commons License. Click on the links below to see the full list of images and attributions:

Marketing and Sales
The Keys to Successful Marketing
The 4 P’s of Marketing
Sales

 

 

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