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New to Business Guide |
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Marketing Your Business |
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In this Section
Harnessing the Power of your Customer Information Customer information is an often-overlooked company asset that can be a powerful marketing tool if used properly. The key benefits to customer profiling are:
By targeting your best customers and prospects, you avoid wasting money and time on low-potential markets. When you concentrate your resources on the best opportunities, you can dramatically increase sales. Determining what information exists on your customers and how easily the information can be obtained are the first steps in customer profiling. You will need to research where customer information exists within your company and the amount of information available. In many organizations, customer information is maintained by the finance, accounts receivable, credit, sales, sales promotion, fulfillment, marketing and/or service departments. Database Marketing After you have gathered the necessary information, you will need to merge the files, eliminate duplicate information and build a customer file detailing the business characteristics of each customer. This file should include buying patterns represented by some type of value indicator, such as annual purchase amounts (sales or revenue) or another measure of customer value to your company. To smooth out seasonal variations, it's best to use at least 12 months of data when preparing value indicators for use in customer evaluation. Database Enhancement The greater the detail available on customers, the more precise and informative your profile will be. Dun & Bradstreet's Customer File Enhancement Service™ augments your customer file with valuable marketing information by matching your customer records with the D&B information base of more than 11 million U.S. businesses. When a match is made, your customer can be identified by its unique D&B D-U-N-S® Number, a nine-digit identification code assigned by D&B to more than 57 million companies worldwide. This lets you access the marketing information in D&B's files. Once you know your customer's D&B D-U-N-S Numbers, you can:
Prospect Profiling This additional information can significantly enhance the value of your customer database by providing you with a more detailed and comprehensive understanding of your customers. By profiling your customers, you can identify the industry segments, size of companies, and other characteristics that make up your best customers. In addition to total revenue contribution, be sure to note the top 10 to 20 customer industry segments by highest annual sales per customer. Frequently, this is a good indicator of the best customer and prospect types. After customer analysis, many companies discover that a small percentage of customers (30 percent or less) account for 70 to 80 percent of their total revenue. Resource Allocation Once you know the characteristics of your best customer groups, you can define your best prospect groups and identify companies in your market areas that match these criteria. Prospects that match your high-potential profile are probably the ones on which you should concentrate your personal selling efforts. Moderate- to low-potential prospects can be handled through lower-cost telemarketing and direct mail channels, at least for the initial prospect qualification process. Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page The next step is to prepare a Marketing Letter that you will send to all of the companies you located with the above databases. The Marketing Letter should be as brief and professional as possible. You should not utilize a handwritten letter or any other unfinished material. You may want to include some of your professional patent drawings with the Marketing Letter. You should also attempt to have the manufacturer sign a Confidentiality Agreement prior to disclosing your full invention. After locating manufacturers and preparing your Marketing Letter, you should then send the marketing letter individually addressed to each manufacturer on your list (speak with a patent attorney prior to sending the letter regarding confidentiality issues.) You should attempt to tailor each letter according to the company you are contacting. Companies typically have a chain of command to process your letter, so you may not receive a response for 2 to 3 weeks. If you have not heard anything from a company after approximately 4 weeks has passed, you should directly contact the company by telephone to see if they are interested in purchasing or licensing the patent rights to your invention. This letter is only a guide. You should modify the letter accordingly. You should seek the assistance of an experienced attorney prior to submitting any invention information to a company whether or not you have a patent application filed. [YOUR NAME] [DATE] [CONTACT PERSON'S NAME] Re: [NAME OF YOUR INVENTION] Dear [CONTACT NAME or MANUFACTURER NAME]: I am the inventor of an invention entitled "[INVENTION TITLE]." I filed a utility patent application for my invention on [FILING DATE] through the law firm of [NAME OF LAW FIRM]. I selected your company because you manufacture [IDENTIFY THEIR PRODUCTS THAT ARE SIMILAR TO YOUR INVENTION]. I believe the [INVENTION TITLE] will benefit your company in many different ways. [IDENTIFY HOW YOUR INVENTION FITS WITHIN THE MANUFACTURER'S PRODUCT LINE]. Briefly stated, my invention comprises [BRIEFLY IDENTIFY MAJOR COMPONENTS]. The unique features of my invention are [UNIQUE FEATURE]. The advantages of the [INVENTION TITLE] are [STATE ADVANTAGES]. I have enclosed a brochure of my invention, which briefly displays the key components for your review. You may also visit my web site at http://www.DreamsToMarket.com for more detailed information about the [INVENTION TITLE]. I am willing to consider selling or licensing the patent rights to my invention. If you are potentially interested in the [INVENTION TITLE], please contact me anytime at [YOUR PHONE NUMBER]. I look forward to your response. Very truly yours, YOUR NAME (typed and a signature) Enclosure: Brochure Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page 1.0 Executive Summary Our new marketing focus, made explicit in this plan, renews our vision and strategic focus on adding value to our target market segments, the small business and high-end home office users, in our local market. American Technology will change its focus to differentiate itself from box pushers and improve the business by filling the real need of small business and high-end home office for reliable information technology including hardware, software, and all related services. Our marketing challenge is to position our product and service offerings as the high quality, high value-add alternative to box pushing in a vacuum.
1.1 Vision AMT is built on the assumption that the management of information technology for business is like legal advice, accounting, graphic arts, and other bodies of knowledge, in that it is not inherently a do-it-yourself prospect. Smart business people who aren't computer hobbyists need to find quality vendors of reliable hardware, software, service, and support. They need to use these quality vendors as they use their other professional service suppliers, as trusted allies. AMT is such a vendor. It serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We make sure that our clients have what they need to run their businesses as well as possible, with maximum efficiency and reliability. Many of our information applications are mission critical, so we give our clients the assurance that we will be there when they need us. 1.2 Objectives
2.0 Target Markets AMT focuses on small business in the local market, with special focus on the high-end home office and the 625unit small business office.
2.1 Market Definition and Segmentation We have broken our markets into groups according to standard classifications used by market research companies: home offices and small business. Exact definitions of these market segments is not necessary for our marketing planning purposes here; general definitions will suffice. We know our home office customers tend to be heavy users, wanting high-end systems, people who like computing and computers. The low-end home office people buy elsewhere. We also know that our small business customers tend to be much less proficient on computers, much more likely to need and want handholding, and much more likely to pay for it. 2.2 Target Market Segment Strategy We cannot survive just waiting for the customer to come to us. Instead, we must get better at focusing on the specific market segments whose needs match our offerings. Focus on targeted segments is the key to our future. Therefore, we need to focus our marketing message and our product offerings. We need to develop our message, communicate it, and make good on it. 2.3 Target Market: Home Office The home offices in Tin town are an important, growing market segment. Nationally, there are approximately 30 million home offices, and the number is growing at 10% per year. Our estimate in this plan for the home offices in our market service area is based on an analysis published four months ago in the local newspaper. Home offices include several types. For our plan, the most important are the home offices that serve as the only offices of professional firms. These are likely to be professional services such as graphic artists, writers, and consultants, also some accountants and the occasional lawyer, doctor, or dentist. There are also individuals who maintain home offices for part-time use, including "moonlighters" and hobbyists. This segment is not who AMT wishes to sell to; our marketing focus consists of professionals and entrepreneurs who maintain a full-time office. In this plan, we will refer to customers in the home office segment as HOs. 2.3.1 Needs and Requirements Our target HOs are on average as dependent on reliable information technology as any other businesses. They care more about reliable service and confidence than about the rock-bottom lowest price. They don't want to rely solely on their own expertise, so they choose instead to deal with us with our promise of service and support when needed. Our standard HOs will be one system installations, no networks, much more powerful systems than the average small business. Fax modems, voicemail, and good printers are likely. They tend to be interested in desktop publishing, accounting, Internet, and administration software as well as their job specific software needs. It's important that we realize we won't be selling to the price oriented HO buyers. We'll be able to offer an attractive proposition to the service oriented and security oriented buyers only. 2.3.2 Distribution Channels Unfortunately our HO target buyers may not expect to buy with us. Many of them turn immediately to the superstores (office equipment, office supplies, and electronics) and mail order to look for the best price, without realizing that there is an option that provides greater value for dollars. 2.3.3 Competitive Forces Our focus group sessions indicated that our target HOs consider price but they would buy on quality service if the offering were positioned correctly. Price is the message they're exposed to again and again; they have been trained to shop on price. We have very good indications that may would much rather pay 1020% more for a relationship with a long-term vendor providing backup and quality service and support; they end up in the box pusher channels because they aren't aware of the alternatives. Availability is also very important. The HO buyers tend to want immediate solutions to problems. Consequently, they can be subjected to high-pressure, under-trained salespeople who may not be able to factor in all of a customer's needs. 2.3.4 Communications One of the best places to reach the target HO is the local newspaper. Unfortunately, that medium is saturated with pure price only messages, and we'll have to make sure that our message is accurately stated. Radio is potentially a good opportunity. Our HO target buyers listen to local news, talk shows, and sports. Sponsoring a technology discussion/call-in talk show is a possibility. Seminars are a tough sell. The target HO buyer rarely has time for seminars. They think most seminars are low content sales pitches, and many times they are correct. The challenge here is to communicate how our information adds value to their enterprise while selling our organization in a subtle, indirect fashion. 2.3.5 Keys to Success The main key to success with HO buyers is making the product and marketing positioning clear. Many potential buyers would much prefer our offering to the box only offerings of the chain stores and mail order sources, if only they possessed adequate information to conduct a value-add cost/benefit analysis. Word of mouth is critical in this segment. We will have to make sure that once we gain a customer, we never lose them. To help accomplish this, we must work to reinvigorate relationships through successful database marketing, among other means. We must always remember to sell the company, not the product. They have to understand they are taking on a relationship with AMT, not just buying boxes. Boxes they can get cheaper elsewhere. 2.4 Target Market: Small Business Small business in our market includes virtually any business with a retail, office, professional, or industrial location outside of someone's home, and fewer than 30 employees. We estimate 45,000 such businesses in our market area. The 30-employee cutoff is arbitrary. We find that the larger companies turn to other vendors, but we can sell to departments in larger companies, and we shouldn't be giving up leads when we get them. 2.4.1 Needs and Requirements Our target SBs are very dependent on reliable information technology. They use the computers for a complete range of functions beginning with the core administration information such as accounting, shipping, and inventory. They also use them for communications within the business and outside of the business, and for personal productivity. They are not, however, large enough to have dedicated computer personnel such as the MIS departments in large businesses. Ideally, they come to us for a long-term alliance, looking to us for reliable service and support to substitute for their in-house people. These are not businesses that want to shop for rock-bottom price through chain stores or mail order. They want to be sure they have reliable providers of expertise. Our standard SBs will be 625 unit installations, critically dependent on local area networks. Backup, training, installation, and ongoing support are very important. They require database and administrative software as the core of their systems. 2.4.2 Distribution Channels The SB buyers are accustomed to buying from vendors who visit their offices. They expect the copy machine vendor, office products vendors, and office furniture vendors, as well as the local graphic artist, freelance writer, or whoever, to come visit their office to make their sales. There is usually a lot of leakage in adhoc purchasing through local chain stores and mail order. Often the administrators try to discourage this, but are only partially successful. 2.4.3 Competitive Forces The SB buyers understand the concept of service and support, and are much more likely to pay for it when the offering is clearly stated. There is no doubt that we compete much more against all the box pushers than against other service providers. We need to effectively compete against the idea that business should buy computers, the heart of their business, as plug-in appliances, that don't need ongoing service, support, and training. 2.4.4 Communications One of the best places to reach the target SB is the local newspaper. Unfortunately, that medium is saturated with pure price only messages, and we'll have to make sure that our message is excellently stated. Radio is potentially a good opportunity. Our SB target buyers listen to local news, talk shows, and sports. Sponsoring a technology discussion/call-in talk show is a possibility. Seminars are a good marketing opportunity with SBs. Employees are often happy to leave their normal routines for a day to learn something new. 2.4.5 Keys to Success The main key to success is making the product positioning clear. Many potential buyers would much prefer our offering to the box only offerings of the chain stores and mail order sources, if only they knew the tradeoffs. Word of mouth is critical in this segment. We will have to make sure that once we gain a customer, we never lose them. We must always remember to sell the company, not the product. They have to understand they are taking on a relationship with AMT, not just buying boxes. Boxes they can get cheaper elsewhere. 3.0 Marketing Plan Strategy AMT will change its focus to differentiate itself from box pushers and improve the business by filling the real need of small business and high-end home office for reliable information technology including hardware, software, and all related services. 3.1 Emphasize Service and Support We must differentiate ourselves from the box pushers. We need to establish our business offering as a clear and viable alternative, for our target market, to the price only kind of buying. 3.2 Emphasize Relationships We need to focus our offerings on small business as the key market segment we should own. This means the 625unit system, tied together in a local area network, in a company with 550 employees. Our values training, installation, service, support, knowledge are more cleanly differentiated in this segment. As a corollary, the high end of the home office market is also appropriate. We do not want to compete for the buyers who go to the chain stores or mail order, but we definitely want to be able to sell individual systems to the smart HO buyers who want a reliable full service vendor. 4.0 Expense Budget Summary The following marketing budget comes to a total of less than $450K. This is actually a decrease over the $485K we spent this year on the marketing budget. We believe we can get more effective marketing with less money, because we are managing the marketing better with the Marketing Plus software by Palo Alto Software.
4.1 Expense Budget by Manager Budget by Manager: As the following table and chart show, the largest budget piece is the $151K (almost entirely advertising budget) managed by Ralph.
4.2 Expense Budget by Markets Most of our budget falls into the general category that applies to both target markets. This is because much of the spending is impossible to divide into specific market categories. Of the portion of the budget that is specific, by far the largest share falls into the small business market, because this tends to lead the market.
4.3 Expense Budget by Type Budget by type: The largest single expenditure program is advertising, at $150K this is actually $30K less than we will have spent this year. The second largest is mailing, which is a priority because of its importance to our database marketing strategy.
4.4 Expense Budget by Product Budget by product: The nonspecific product spendings amount to the largest total, $235K of the total $423K. The least is the training spending, at only $26K. The nonspecific spending on product makes sense, because it is related to general training and development of our business expertise.
5.0 Sales Forecast The $6 million sales forecast is shown in detail in the tables and charts to follow. This represents a 20% increase over the present year. We believe it is a conservative forecast, and we are sure we can make our numbers this year as a result of more effective marketing.
5.1 Sales Forecast by Manager Sales by Manager: As might be expected, Leslie has by far the largest sales quota to manage. This is suited to our strategy of putting Leslie in charge of the sales force, and tracking sales through the sales force. Details follow.
5.2 Sales Forecast by Markets Sales by market: Our most important market, by far, is the small business market. The sales forecast shown in the following table and chart is a superb reminder of why we need to focus on the specific target markets.
5.3 Sales Forecast by Type The data shows that we are still unable to attribute our sales in any significant way to our sales and marketing program. The "Sales" type shown here is the general sales' coming in that is not tied to a specific type of program. This is obviously by far the largest portion of our projected sales. Advertising comes second. This doesn't indicate a problem with the plan or our implementation; it is just a fact of life. Much of our marketing activity generates sales in ways that don't allow us the luxury of tying it back directly to a specific program.
5.4 Sales Forecast by Product Sales by Product: The $6 million sales forecast is shown in the following table and chart. As always, our largest single sales item is the sales of systems. The next largest item is the general, non-specific sales, which of course will also be mostly systems. The details follow.
6.0 Measurement and Comparison Overall, we plan to spend 7.28% of sales on sales and marketing expenses, which seems about in line for our plan, and for our industry. That breaks down to 3.78% of sales for home offices, 12.79% for small business, and 10.98% for expenses not tied to either one. As broken down by products, we spend about 3% of sales on software and systems, and 16% on service and 23% on training. This breakdown makes sense for our marketing, because of the impact on software and systems of better training and better service. 7.0 Marketing Organization AMT is still a small company, despite our recent growth. Ralph, President, is responsible for general management. He specifically manages the advertising budget, but otherwise is responsible for sales and marketing as the head of the organization. Leslie, our sales manager, is responsible for managing the in-house and the outbound sales forces. We have also put the mailing programs under Leslie, because they must be carefully coordinated with the follow-up of the sales force. Casey, our marketing manager, is responsible for marketing programs including sales literature, trade shows, the catalog, etc. Jan, who reports to Casey, will take the key role in the seminar marketing programs. Sonny, who manages service, will also manage the marketing programs related to service. 8.0 Critical Issues
Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page Letting the World Know You're in Business If you did the activities described in the previous articles, you have defined: 1) what type of service you provide, 2) your long- and short-term goals, and 3) your target market(s). If you haven't written down all of these, take a moment to do it. You are now ready to think about marketing strategies. What are your prospects' buying considerations? Activity: Look at your write-up for your target market. Ask yourself (and answer) these questions:
How can you let your prospects know you are in business? Activity: Identify at least three organizations that draw your prospective client base. Join those organizations. More importantly, attend their meetings. While getting repeat business and referrals remain the number one and two ways of generating business (see "Marketing Your Services: 1993 Reader's Poll Results," The Khera Business Report, July 1993), networking is also at the top of the list. If you are a Sybase expert, for example, do you attend Sybase User's Group meetings? One consultant I know makes it a point to attend every user's group meeting in his field. He also presents papers at these meetings to reinforce others' perception of his expertise. Even though many of the attendees are not the decision makers who have the authority to hire him, he passes out his business card and encourages people to call him if they have problems. He also makes it known that he is a consultant and can help during time crunches, etc. By keeping active in other professional associations as well, he has established himself as an authority in his computer specialty. This is where that 20-second concise description of your services comes in (see Part I). When you network with people and they ask what you do, a clear, understandable statement can make all the difference in the world. And, knowing which meetings your prospects attend gives you the opportunity to meet them in an unobtrusive, non-threatening way. A while ago, I ran into someone who wanted custom software developed under Windows. I know several developers who can produce software for Windows, but only a few who specialize in it. I felt more comfortable recommending the specialists I see regularly at monthly Independent Computer Consultants' Association (ICCA) meetings. Make it a point to get yourself in front of others who might recommend you. How do I follow-up with people after I meet them? Activity: Write a two-to-three sentence description of a problem that a recent client had. Below it, write a short paragraph describing how you solved that problem. Everything should fit on no more than two-thirds of a page. Nothing fancy. Just use your own words, as if you were speaking to someone. Study your write-up for a moment. Can you find any angles that others might find useful? Does your solution incorporate new software? Does it use propriety code that you developed to finish projects faster and cheaper? This short "Problem/Solution" sheet can give someone insight into your capabilities. You can develop a whole series of Problem/Solution sheets that address the different projects you have done. This way, when you meet someone who has a need similar to the project you finished two months ago for ABC Associates, you can send a written document as part of your follow-up response. Before you send this type of document, however, you should present it in a graphical appealing and clear format. Consider using a professional editor to clarify your text and a graphic artist to help you with the layout. Using such professionals is well worth the investment because they can do wonders for your image and follow-up material. To give your material a printed look, use preprinted color paper that you feed through your laser printer or copier. These papers are available from sources such as Paper Direct (1-800-A-PAPERS) and Idea Art (1-800-433-2278). Whenever I meet someone at a meeting, I follow-up with what I call a "nice to meet you" letter. It is a short note that recaps the meeting's discussion and reminds them that I write documentation, proposals, marketing material, etc. in plain English. As appropriate, I include information about past projects or relevant articles I've written. You can also modify your Problem/Solution sheet to read like a "how to" article and submit it to magazines for publication. This will increase your visibility and credibility for the price of a postage stamp. Depending on the urgency of a prospect's needs, I schedule a follow-up phone call. For those who have no project or need when I meet them, I schedule the call about two months down the road. This way, I'm not nagging them. I call to find out how they are doing, not necessarily to determine if they have an upcoming need. You'd be surprised to see how warm people are when you are not trying to sell them anything. Software such as ACT and PackRat are excellent products to keep notes on your contacts and to schedule calls, meetings, and "to do's." Both are very comparable products and well worth the investment. You can track client expenses and even categorize contacts based on user-defined criteria. |
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