by Bert Shlensky | May 17, 2018 | Marketing
The original concept in 1908 by Pareto was that 20% of the population controlled 80% of the wealth. In the modern business realm, it has been proven time and time again that 80% of business revenues are generated by just 20% of our customers. Yet we all continue to waste time, money, and inventory dollars on customers that bring in a lower return. This tendency also frequently adds confusion and complexity. At StartupConnection, we help our clients prioritize.
While much of following the 80/20 rule is focused on analytics, the most important (and sometimes simplest) way to keep existing customers happy and is to exceed expectations. As Walt Disney said, “Do what you do so well that they will want to see it again and bring their friends.” Satisfied customers, repeat customers, positive social media, and referrals are the best and least expensive marketing a business can have. There is no substitute for a satisfied customer. In contrast, dissatisfied customers, poor service, and negative referrals can offset even the best marketing efforts.
Some specific examples of using the 80/20 rule with my own clients:
- We helped a number of businesses create sharing sites for parties, home services, programming etc. While the concept is relatively simple, the cost of finding suppliers and developing marketing programs can be both expensive. I have been successful in encouraging these businesses to focus on the services that have the most potential.
- We helped a textile company prioritize its product offerings; at first they were focused on being all things to all people. We worked on developing groups of products, increasing design and marketing efforts, and eliminating over 40 % of the products (which represented less than 10 % of sales.) The result was greatly improved efficiency, but more importantly, the ability to add products by more integrated merchandising.
- Prioritizing and following the 80-20 rule can be easily improved by just taking care of your best customers. For example, why do new customers sometimes get better discounts than the best old customers? I encourage clients to treat the best old customers really well, in addition to seeking out new customers.
Here are some tips to consider when executing the 80/20 rule:
- Reduce inventory. By following the 80/20 rule, you’re choosing to operate using less inventory. You must first admit that certain products (even if you truly believe in them), simply are not selling. This leaves more room for carrying the products that do sell.
- You should spend your resources on what you know will provide a return on your investment. Reducing products that may or may not be a good fit for your customers can save you money. Also, think of all the headaches, space and time you’ll save by not having to market obsolete inventory.
- The 80/20 should not preclude development and testing of new products. However, this usually requires more analysis of the program, evaluation of results, and withdrawal if success is not apparent.
- Simplify products and services. Your customers will also appreciate this. Think about the last time you went to the store to buy one simple thing, and you saw enough options to fill a late 1980s Sears catalog up. It made it difficult to choose the right product, didn’t it?
- By focusing on the products that you know your customers want, you’re making them feel much more confident (especially when you’re selling online.) Instead of finding new ways to market products that simply aren’t selling, you may be better off to shift over to what is selling. If you give people what they’re searching for, they’ll buy. If you don’t, they won’t. It’s that simple.
- Have you run an unsuccessful AdWords campaign lately? It may be the actual product or service that you’re marketing and not the ad. If you’ve followed every best practice and your product isn’t selling, maybe you have to blame the product, and not the ad.
- I know you hate developing complex forecasting models and spending lots of administrative time on the logistics of obsolete products, but you’ll get over it. Who knows? You might even find some more leisure time.
- Suppliers also like the 80/20 rule, and they may reduce prices or increase service if their orders are more concentrated. Everyone in the supply chain, right on down to the customer, is much happier as a result.
This brings me to my next point… what is the MOST important reason the 80/20 rule works? Happy Customers! Want to start rocking your business by following 80/20? Contact me and I’ll get you started!
Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA And PhD from the Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business and President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select startup and small businesses.
by Bert Shlensky | May 11, 2018 | Marketing
OVERVIEW
At Startup Connection, we believe that the skill of communicating passion for your business — in the form of a refined “elevator speech” or mission statement — is a pure necessity to your success.
Mark Twain is often credited with saying, “I would have written a shorter story, but I didn’t have the time.” These days, we refer to a very short synopsis of your business as an “elevator speech,” and in this article, we’ll call it “the sales pitch.” A sales pitch is a concise, carefully planned, and well-practiced description of your company that anyone should be able to understand in 60 seconds or less. Learning how to give a great sales pitch is a valuable way to share your message. It is also a great way to truly refine the essence of your company’s vision and plan. On one hand, starting the sales pitch is not easy, and it requires some effort and practice. On the other hand, the process should be made as simple as possible.
One of the best strategies we suggest is to start with taking less than one hour to write a first version. Focus on your idea, passion and emotion in this draft. Don’t worry about content, format, or style… we can help you fix all that later.
The sales pitch is as essential as your business card, and you have about one paragraph to get the attention of your audience. You need to clearly and rapidly be able to communicate who you are, what you do, and how you can help your listeners.
Before you can convince anyone of your business proposition, YOU need to know exactly what that business proposition is! You need to define precisely what you are offering, what problems you can solve, and what benefits you bring to prospective customers or clients.
Specifically, the sales pitch answers some of the following questions:
- Who are you and who is your company? For example, “My name is Jim Cando and my company are Cando Widgets.”
- What are your key products or services, and what are their strengths? “We make awesome widgets that are guaranteed to make you healthier, richer, and happier. Our widgets are made with 100% healthy ingredients, cost less, and are easy to use.”
- What adjectives come to mind to describe your company? Avoid common words like better, bigger, and well made. Instead, think of emotional terms like indestructible, exciting, or scrumptious.
- Who is your target market? Be specific in terms of age, lifestyle, location, and income. “We target millennial men who work out and are looking for a shirt that fits”.
- What problem do you help customers solve? Talk about benefits instead of just descriptions. Examples of benefit statements include: “We help you save time and money,” “We make what is usually a horrible experience into something satisfying and exciting,” or “We understand our customers, and ensure that they have the best product selection.”
- What is your business model and strategy? For example, “We are a home service company. Our goal is to develop a base business of 500 customers and $1 million in revenues, and then to grow 10 to 20% per year. We plan to spend 15 to 20% of our sales on internet marketing, materials demonstrations, and exceptional customer service. Our profitability is derived from our low overhead, competitive margins, and growing brand.”
- Who is your competition and how are you better? For example, “Our competition is anyone who sells widgets. We offer the right product at the right price, with great customer service and product selection. We save customers money by helping them purchase the most effective product (rather than the cheapest or one with the most bells and whistles) based on what they need.”
Your challenge is to deliver a great pitch that will make someone want to know a whole lot more about your business.
WORKSHEET
Basic Elements of a Good Elevator Speech
Once you have developed a good sales pitch, you will be amazed at how handy it is, and how often you use it in a variety of settings. To be sure your pitch is top-notch, here is a checklist of important elements to consider:
- A “Hook”: Start with a hook, a statement or question that piques interest and makes the listener want to hear more. A hook can be a surprising or amazing fact. For example, if you were marketing a product geared towards entrepreneurs, you might start with “More than one out of every two Americans works for or owns a small business.”
- Length: Your pitch should be less than 60 seconds. If your sales pitch runs on for too long, you risk losing the interest of your listener. Get to the point you are trying to make, and explain why it will benefit your target audience.
- Passion: Listeners will expect energy and dedication in your speech. If you aren’t excited about your idea, why should the listener be? Why is this idea exciting, and how will it benefit your target audience? This must be conveyed in your sales pitch.
- A Request: At the end of your pitch, you must ask for something. Are you looking for capital? Strategic partners? New markets? Use the fact that you are with the customer to your advantage – ask them to take advantage of this opportunity and close the deal on the spot. Always establish a follow up question, in case your target is unable to commit outright.
- Practice: Be sure to spend time developing, practicing and testing your pitch. Create short videos of your pitch and critically review your presentation. It is imperative that you convey confidence in your product, and how it will benefit the customer.
Think about your ideas and call me for some free mentoring. I know it is not easy, but the more you work on defining your business, the more comfortable you will become. Call today at: (914) 632-6977.
Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA and PhD from the Sloan School of Management at MIT. He served as the president of West Point Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start-up companies and small businesses. Call today for a free consultation, so we can use our business plan templates to take your business to the next level.
by Bert Shlensky | Feb 8, 2018 | Marketing
Technology has created lots of great tools to increase sales and conversions like targeting, follow-up and lead generation tools. However, I am concerned that these may be becoming an excuse for ignoring basic good practices and too many small business owners are getting burned.
“A great idea without execution is a hallucination” as Benjamin Franklin once said. We sometimes get enamored with the latest technology or fad and forget the importance of factors like executing, expertise and experience.
The most robust technological solutions in the world are only as strong as their greatest area of weakness. If one thing fails with your technology, are you still capable of devoting enough attention to resolving the negative and turning it into a positive to increase their satisfaction with you? Are the consultants you hire?
Without a human element continually factored into your equation for success, you’re doomed for failure. We all know satisfied customers are the best marketing tool and dissatisfied customers are the biggest negative.
Here are some increasingly common scenarios for businesses that I’ve consulted with who are trying to grow their businesses by improving their online presence:
Lead Generation Consultants Leading to Nowhere
Many lead generation consultants seem to have some great tools. However, they frequently ignore that the specifics of who your customer base is and how to reach them. This can lead all parties astray when it comes to staying focused on your goals and needs and more importantly your customer’s experience.
Choose a lead generation program or outsource lead generation to someone who prioritizes communicating with you about what they plan to do and will be honest with you about the expected results. Learn about the process instead of fobbing it off to someone along with a big financial commitment.
Web Designers Who Skimp on Deliverables
All too often, web designers ignore the parameters they provide clients with, such as timelines and features that they are capable of delivering on. Clients should always be informed of schedules, deliverables, and given the respect of communicating when there is a delay expected.
In a recent survey, 92% of small business owners plan to have a website by the end of 2018, so it’s important to be choosy. The competition is getting stiffer. That doesn’t mean you can’t be choosy about your web designer.
Digital Marketing Agencies That Dodge Questions
Chances are, if you’ve shopped around for a digital marketing expert, you’ve encountered many who ignore simple explanations of themselves and their services. Social media consultants in particular frequently ignore excellence and best practices while becoming obsessed with technology.
Websites, blogs, and emails are great, simple efforts to illustrate if they have what it takes to follow through. If they’re not up to par, they probably won’t do more for you than they are doing for themselves.
References are still important, but in so many cases, those we hire hesitate to provide them. See what’s on their website and LinkedIn profile and pages. Do others sing their praises?
Furthermore, it’s not enough for them to point you to what they’ve already done. They should be able to explain what they can do for you
Beware of The One-Stop-Shop
More and more consultants claim to be a “one-stop-shop.” If they’re vague on potential outcomes and like a “dog in heat” on your commitment, be skeptical. If they require commitments involving thousands of dollars for 3-6 months based on limited proposal details, projected timetables, and potential takeaways, steer clear.
Many solutions are frequently boasted as one-size-fits all solutions, especially when it comes to expensive technological solutions. Eric Rise, one of my favorite authors right now, argues that failure is part of achieving success in his recent book Lean Startups. We all need to measure and then pivot to eventually achieve excellence.
So many say that they can “do anything” and this is simply not a realistic response. Someone you hire should be able to speak about what they are unable to do just as well as what they are able to do. No one can do everything well.
The worst part about all of these examples is that small businesses waste so much money in these scenarios and start to give up hope. Many efforts are ruined by dumb distractions when all that anyone wants is to find useful and simple tools that can help us all grow in the long run from our investment.
Want to speak to me about how you can grow your business online without getting into lengthy commitments with people who don’t come through? Contact me.
Dr. Bert Shlensky, president of StartupConnection is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start-up and small businesses.
by Bert Shlensky | Jan 30, 2018 | Marketing
When someone asks you who your customers are, how do you answer? Do you answer based on your perception of them and who’s already purchasing your products or based on actual information? Chances are, you haven’t delved into your demographics as much as you need to.
What Are Demographics?
Demographics are, by definition, the study of a population based on factors such as age, race, sex, economic status, level of education, income level, and employment. It should always be the first step in estimating your potential, limitations, and focus. They are among the most critical and relatively easy factors to consider in your marketing, planning, and strategic decision making.
Uncovering key demographics can be a bit like taking a look in your professional closet. You probably have an impeccable wardrobe, but it’s tough to see all that potential when there’s a giant elephant standing in your way. It’s time to deal with the elephant.
Where to Start
I regularly see business plans that begin with defining their market as the 320 million people who live in the United States and eat, dress, or consume something. No matter what industry you’re in, that is the wrong place to start. You have to dive deeper from the very beginning.
Even if you’re not at the very beginning stages of building your business, you should be studying demographics often and delve deeply into the information at hand. It’s crucial to the success of your marketing efforts.
Here are some staggering statistics that will make you question the audience you’re marketing to, according to the US Census Report. Out of that 320 million people who live in the United States:
- Between 2015 and 2025, the U.S population is projected to grow from 321 million to 347 million.
- 18 million or about 70% of the growth will be over 65 years old between 2015 and 2025
- As a comparison, between 1970 and 1980 the 15-35 population grew 19 million showing the start of the baby boomers as the bubble in the population.
- In contrast the under 65 population will only grow about 8 million people or less than 3%.
- Similarly, the Hispanic population has grown from 3% to 10% of the population.
- Since 1980 States like Florida, Texas and California are dramatically growing while rust belt cities like Cleveland and Detroit are rapidly losing population.
- 50% are one gender, which frequently reduces the market size
- 30-50% of are frequently too poor to buy many products or services.
- Approximately 40% of the U.S. population is between the prime purchasing ages of 25-54.
What’s the point here? The beginning number you should be starting with is actually more like 30-40 million people versus 320 million people before you analyze factors like geography, lifestyles, and ethnicity. This increased diversity demands that you differentiate the totals from your market.
You can start to gather valuable demographic information about your market for free. There is a great tool available from the U.S. Census Bureau that lets you quickly understand the demographics in your locality. It doesn’t take long to gather information and you may be surprised by what you discover.
Understand Your Audience
Studying demographics is an ongoing process. Once you’re at the base line of understanding your potential customers, you must have your ear to the ground and start to identify trends.
For example, If you live on places like Orlando or hurricane regions, this can have a profound effect on your business. It is estimated over 100,000 people moved from Puerto Rico in the last few months. You will not see that number reflected in U.S. Census data.
You can’t just look at the numbers. You have to understand the people that the numbers represent and try to look at the factors that they deal with that you may not dealing with.
Here are some key things to consider when you’re studying demographics for marketing purposes:
- Income: The reality is that the top 1% of the population accounts for about 80% of income and continues to increase while the lower 20-40% continues to struggle. Marketing to struggling service workers requires far different strategies than marketing to Silicon Valley millennials.
- Social Changes: Women and minorities have not always been treated with dignity as consumers. My wife still remembers going to buy a car and being ignored by dealers and being called “honey.” Today, women and minorities comprise a significant portion of both car buyers and dealership employees. This demands respect.
- The Internet of Things: The internet and its usage especially among younger people will continue to explode. Nearly every consumer-based market is dominated by businesses that are capitalizing on the internet of things like Amazon and Google. Recently, UPS increased its Christmas delivery time from 1-2 days because it could not handle the increased demand, which was highly predictable. Similarly, services like Uber, Air B&B, Amazon, and thousands of other businesses are disrupting their individual markets.
- Analytics: Chances are that your competitors are already taking advantage of a myriad of advanced analytical tools. CRM systems are completely changing the game and giving businesses new opportunities to understand their customer base.
Ignoring demographics and demographic trends, whether on a small scale or large scale will be done at a business’ peril. You must make certain to constantly evaluate relevant demographics and demographic trends as they relate to your business both in the now and in the future. This includes both local and national trends. Demographics can be one of the keys to your business’ success or failure.
Contact me to learn more about how you can research demographics in order to help you market your business more effectively and remove that old elephant from your closet.
Dr. Bert Shlensky, president of Startup Connection (www.startupconection.net) is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start up and small businesses.
by Bert Shlensky | Nov 3, 2017 | Marketing
How do you get your message across to the right target with all the different forms of communication at work today?
There are hundreds of emails, hours of television, podcasts, streaming video, texting, messaging… there is no end to it.
The result is that we all shut out the communication we don’t want to hear. So, the small business has to give its communications a powerful boost in order to break through the clutter noise. On the other hand, effective communications make sales, so you can’t keep quiet.
Here’s how to get your message across :
- Know your target: Before you think about what you’re going to say, think about to whom you are going to say it. Good communication starts at the receiving end, that is, you please the consumer just as you do with your products. Think about the what it is in your product or service that most interests your customers, and make that the main topic of your communication. That way, they’ll listen.
- Tell a short but meaningful story: You have a real message to get across, so tell the story as simply and clearly as possible, putting in only the parts that the target will care about. Don’t add a lot of extraneous detail, and don’t put in a lot of info about your history or your life. Keep it simple and relevant to the reader.
- 90% of most impressions are made in the first 30 seconds of contact: Find a simple idea that you know will appeal to your customers and get them started with it. The first impression is not based on the substance of the communication. One way to make sure you get the starting part right is to write your story, then cut it in half, then cut it in half again. Now take the main idea, and start with that. And don’t make your first communication too long…
- Don’t try too hard to sell: Your customer will evaluate your message on its merits. Sure, if you are offering discounts or freemium than let them know right away. But, give them the full sense of what makes your product great. If you just say “Buy, buy, buy,” you’ll lose their attention.
- Give them solutions, not problems: Your customer knows what the problems are. Show how you can solve them. Give them a “WIN-WIN,” with an emphasis on the benefits of a relationship. Be sure to respect your targets’ expertise, experience, and opinions, and then show them that your message is right up their alley.
- Give them a call to action: As part of what you offer, give them a chance to learn more, or to watch a video, or to get more details. Always end your communication with a call to action. This means the communication can move up to another level without asking for money from your targets. If they’re interested, they will take the opportunity, and that will give you a chance for a real sales pitch.
- Move to informal communication: After telling your basic story, offer a move to texting, messaging, or a call. Many viewers, especially younger ones, prefer interactive texting or messaging to reading or watching videos. The plus is, once you’ve got your prospect listening and replying, you can zero in on what they really want and try to sell them on your offer.
- On a personal note: if you are over thirty, call your mother. She probably prefers the telephone. If you have teenage kids, take a look at their cellphones; not to spy, but to learn all the great internet advances they are using. Different generations prefer different types of communication – if you are targeting seniors, plan on making old-fashioned calls, but for Millennials, plan on getting on twitter or Facebook or Instagram, etc.
These tips give you a sense of how to manage effective communications and get your message across . Give it a try, and see how much more response you get when you follow my advice. Then, if you want to learn more about effective communication, please contact me here.
Dr. Bert Shlensky, president of StartupConnection.net, is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start up and small businesses.
by Bert Shlensky | Oct 26, 2017 | Marketing
How small businesses can get pricing right
Did you know that being dead cheap could be dead wrong for your business? Many small businesses try to be the cheapest, thinking that it’s a certain way to make more sales – but pricing does not work that way.
If your pricing strategy doesn’t go beyond being cheap, you’re at risk!
Consider how Uber prices its rides. Uber originally tried out just being the cheapest all the time. It didn’t work – drivers didn’t want to work for so little money at inconvenient times like late nights, Saturday nights, or holidays. Guess when demand for Uber cars is the greatest (you can read all about this on an Uber blog)? So, Uber created a dynamic pricing strategy linked to demand, as well as a lot of other factors, and it worked brilliantly.
Learn Dynamic Pricing!
Today, most companies use a dynamic pricing model. These can range from the ”early bird special” to sophisticated algorithms, like Amazon. Try being cheaper than them, and they’ll find a way to reduce their prices further than you can, at just the right times.
Because, it’s not all about price. Consumers look at price as one factor among many. The consumer thinks about quality, usability, overall value, look, and feel, along with a number of other aspects – each product has a different combination of consumer-appeal factors.
For many products, price isn’t at all the main aspect involved in consumer choice in evaluating the total value of a purchase. Here’s an example from the Harvard Business Review: “Some products have a much more immediate and dramatic response to price changes, usually because they’re considered nice-to-have, or non-essential, or because there are many substitutes available. Take, for example, beef. When the price dramatically increases, demand may go way down because people can easily substitute chicken or pork.”
More complicated products have more factors to consider; keep in mind that “price elasticity” – the technical term — isn’t just a factor of how well you’re marketing. It is also affected by the type of product you’re selling, the income of your target consumers, the health of the economy, and what your competitors are doing. “You can’t look at it in isolation; you have to look at it in context of the industry and its competitive structure and in the context of consumers’ lives,” as the HBR article explains.
Getting the Price Right
To get pricing right, it must be a part of integrated marketing programs that also consider product, service, quality, competition, price elasticity, and internet channels – each product calls for a selective strategy.
As part of your overall analysis, there are some pricing tactics you might consider:
- FREEMIUM is one of the most powerful pricing strategies today. Promotions are incredibly effective and, contrary to popular belief, they don’t hurt your image or make you seem cheap. Google, Facebook, the cloud, public organizations, and open source programming all give things away to build their long-term success. What makes freemium so effective is that it builds trust with customers. You give away something of genuine worth, and then the customer believes that you deal in products with inherent value. Gaining customer trust is the most powerful form of marketing.
- Drop High Maintenance Goods: You need to get customer reaction to your products, so that you can learn which ones the consumers say have high customer service and maintenance attached. Get rid of products that customers have had bad experiences with – this enables you to concentrate on popular ones for which you may be able to earn higher margins. Drop the unprofitable lines and find out what customers don’t want – this will help you to put together a clear pricing strategy.
- Selling exclusive products and services is another tactic to keep prices and margins higher. You can’t be beaten down by the competition if they don’t really have the product you can offer. Exclusivity is not necessarily just the simple product. It can be quality, service, or just a simple understanding of your needs. Psychological Pricing: Base your prices on factors such as perception of product quality, popular price points, and what the consumer perceives to be a fair value. This pricing relies on a positive psychological impact on the customer.
The key factor in all of this is the value you offer your customers, and this is why building trust combined with pricing psychology are powerful tools. Your customers perceive a value in what you offer in terms of its intrinsic value, and the effects of the product on their lives – i.e. buying a takeaway meal provides good food, but also saves the consumer time in preparation.
Taking all of the pricing factors into account isn’t easy. That’s why we, at StartupConnection, can help you understand how to go about it.
Why don’t you contact us and let us help you to have an effective pricing strategy?
Dr. Bert Shlensky, president of StartupConnection ( www.startupconection.net ) is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start up and small businesses.
