5 Paths To Improved Marketing Success Through Operations

by | Sep 13, 2018 | Operations

Operations is finally getting its rightful place in small business strategy. Automation, technology, customer needs, and the sharing economy are becoming vital components of the branding and marketing process. In order to achieve marketing success through operations, here are some examples:

  • In sports, analytics can be used to improve the individual impact of player skills. Defensive shifts in baseball, the three-point play in basketball, and increased passing in football are fundamental changes that have been accelerated by analytics.
  • When selling on the internet first started, delivery and security were thought to be major barriers. Today, customer service and delivery in 1-2 days are generally standard. In addition, the internet has proven that eliminating stages of the sales process (like those used in brick and mortar stores) can dramatically reduce costs and prices.
  • Creativity, differentiation, and advertising have been the focus of traditional marketing and branding programs. However, issues like value, service, quality, and culture are producing better results. Compare the focus of many brands in department stores, versus Amazon and other leading online sites. I argue that online retailers succeed partly because of the lack of technological skills among many traditional marketing professionals.

Here are some ways to improve marketing success through operations:

1.  Digital Branding and the Internet – If you research anything about business today, it’s obvious that Apple, Google, and Amazon are three of the most important sales and communication vehicles. Nearly everyone uses their phone and/or laptop to research and buy products and services. However, the digital efforts in many companies are still buried in departments like accounting or marketing. I argue that digital activities and marketing need a special place in organizations and should be a major part of marketing programs. For example, digital activities need to be an integral part of efforts like emails, websites, sales, marketing, social media, logistics, and customer service (and should be treated that way.)

2.  Excellence – There is an ongoing debate about pursuing excellence versus change just for the sake of change. This topic is affected by several issues and we need to understand how problems can require different solutions. Businesses are subject to radical change, so they need to build mechanisms into their processes. While we will face more uncertainty and instability, we need to focus on changing and simplifying processes to reduce the risks. Strategies like pivoting, developing and testing/measuring/adapting need to be built into our organizations.

3.  Service – Service, image, and culture are frequently the biggest (and often least expensive) ways for small companies to develop a brand and differentiate themselves. Some suggestions:

  • Focus on your target market, segment, and your ideal customer.
  • Be polite, listen, and then act based on what you have learned.
  • Become a trusted resource to your prospects by providing information that will help them make a good choice.
  • Build an email list and send informative mailings on a regular basis.
  • Keep in touch with potential and existing customers.

4.  Company Culture – Creating and maintaining a positive company culture is a critical component in achieving excellence and establishing a great brand. A great strategy without a supportive culture will undoubtedly fail. I’ve seen it happen too many times.

Open systems are becoming a critical aspect of great cultures and they often reject bureaucracy, authority, and hierarchy. Open systems encourage participation, diversity, new rules, and to some extent, chaos.

There is no better example of this than the Golden State Warriors, who just won their third NBA title in four years. Much of the attention is given to their super stars, but if you look behind that, you see how the entire organization (including the training staff, coaching staff, medical staff) are all united to create excellence and a unified culture.

5.  Prioritizing with the 80-20 Rule – Prioritizing can produce dramatic results. In particular, focusing on strengths and eliminating weaknesses has dual benefits. For example, I have a client who has the best product in the industry, but charges a little more money. She has achieved success by moderating some prices, but mostly in developing messages that explain her quality difference.

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.

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.

In summary, operations, and logistics should be viewed as a critical opportunity to improve sales, profit and competitive positioning. While there are some technical aspects to this, it is the thought process and integration of the key components that will lead to success.

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 start-up and small businesses.

Prioritizing is Easy With the 80/20 Rule

by | 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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?
  5. 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.
  6. 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.
  7. 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.
  8. 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.

New and Disruptive Methods of Financing

by | Apr 11, 2018 | Finance Articles

We all know that new strategies and technologies such as the internet, social media, Smartphones, and major online retailers are rapidly disrupting organizations. However, financing and the financial industry have been very slow to adapt. The purpose of this article is to recommend a number of tactics to take advantage of new (and sometimes disruptive) financing opportunities. At the Startup Connection (www.startupconnection.net), we believe that a very important (but often overlooked) opportunity is that operating and marketing processes should also be viewed as financing tools.

We still mostly live with an old world of small business financing. Most financing (including institutions like banks and the SBA) are based on antiquated businesses, such as manufacturing and retailing. In the old business model, you quit your job, built a building, bought inventory, hired lots of people, paid high interest rates, gave away lots of equity, and then waited 1-2 years to make any money. This was financed through asset loans, guaranteeing debt with family assets and your own savings.

Fortunately, the reality today is very different. Most new business are service or technology businesses, and they require much less investment. Another very important factor is that you can now quit your job much closer to actually starting the business.

The biggest changes may be finding marketing opportunities to accelerate growth and using techniques to minimize financing needs. At the Startup Connection, we recommend a more comprehensive and flexible approach to the process. This approach puts a slightly different perspective on key issues, such as: How much money do you need? How and when will you pay it back? Why should someone invest or partner with you?

Many clients start the entrepreneurial process asking the age-old question, “How do I raise money?” I argue that is the old way to start, and this mindset needs to be changed to be more successful. Old style advisors often recommend raising as much money as possible. In contrast, I believe in minimizing to reduce costs and risk, and to keep equity and avoid excessive financing charges.

There are other new perspectives to financing your business. We live in an environment with low interest and inflation rates, and lots of capital to invest. This article identifies financing suggestions, organized into operational, marketing, new, and traditional methods.

Operational Financial Resources

The simplest source of funds is to reduce the need for funds through regular business tactics. This can be accomplished with strategies of outsourcing, contracting services, using sharing resources, and testing. While not all of these strategies may be appropriate for every business, consider the ones that have most potential to save cash:

  • Use services for internet management, warehousing, and programming,
  • Plan and manage inventory to maximize return: focus on the 80-20 % rule that 80 % of your sales will come from 20 % of your products. In addition, manage inventory and services for seasonal and market changes.
  • Minimize investment through strategies like renting or sharing. For example, warehouses, cooking facilities, and manufacturing can all be outsourced. One caution: doing things in of your home has long term, operational and frequently legal implications.
  • If asked, suppliers are frequently willing to help a business through things like financing, holding inventory, reducing production times, and shipping direct.
  • Consider direct shipping from your facilities, or organizations like Amazon.
  • Understand and minimize complexity. For example, there is a big difference between selling a shoe (with various sizes, colors, widths and styles) versus selling food products (that have a few ingredients that can made into a number of items.)
  • Analyze why you are really spending and what you will get from it.
  • If the business is profitable and growing, you can frequently finance the growth with working capital from profits. This also means giving up less equity.

Expanding Marketing Efforts

Don’t wait for business to come to you but consider the rule: you have to spend money to make money. Analytics, internet marketing, and outsourcing programs provide numerous opportunities to grow and make money faster:

  • A website and simple marketing statement provides basic information for potential customers. These can be inexpensive through programming tools like WordPress.
  • Amazon is the fastest growing retailer in the country and controls about 30-50% of most category internet sales. It is easy to set up and relatively inexpensive.
  • Paid search through organizations like Google and Facebook are underestimated. These options can be inexpensive and fast, and the results can be measured.
  • There is nothing as productive as Networking, Networking, Networking!
  • These tactics need to be tested and measured. Kill or modify the ones that fail and expand the ones that succeed.

Non-traditional Sources of Financing

  • Crowdfunding was initially used by “social entrepreneurs” to fund their projects, films, books, and social ventures. It consists of offering to small investors in your business, through organizations like KickStarter.
  • While credit card interest can accrue (at a high interest rate) if not paid off right away, some credit cards do offer a startup business a 30-day free program, or zero interest (for sometimes up to 18 months) with a new account.
  • Bartering, alliances and exchanges are viable methods to get both excellent services and save cash.
  • Community based lenders (such as non-profit, independently financed, or private organizations) often make loans to small businesses or entrepreneurs who do not qualify for traditional commercial bank loans.

Traditional Sources of Financing

  • Equity from yourself, friends and family. This is the amount of money you can put into the business on your own, and you don’t have to pay it back until you see profits. It can come from a variety of forms and can include sweat equity and contributed assets. It also provides other investors with more confidence in your commitment
  • Outside equity had the same properties, except it involves giving up at least some equity in the company. It can come from a variety of places like partners, venture capitalists, private equity dealers, private offerings, and private investors.
  • Traditional banks and loan institutions are focused on reducing risk and making certain they get paid back. These are usually asset-based loans or combined with equity contributions.

Raising financing is a two-way street that requires honesty, understanding and communication. Understand your needs and risks to find the right kind and type of investors. Don’t overestimate your potential or what is needed to meet your goals.  Develop plans, measure results, and satisfy investor requirements.

Dr. Bert Shlensky has an MBA and a PhD from the Sloan School of Management at MIT.  He is the President of the New York-based consulting firm The Startup Connection, where he uses his 30 years of high-level business experience to guide his clients towards maximum sales and profit. For a free consultation, please visit www.startupconnection.net.

If Business Risk Makes It Comfortable, You’re Denying What’s Possible

by | Aug 28, 2017 | Planning

Anyone needs to read the The Path of Least Resistance as a way to drive them toward creative growth, authored by Robert Fritz and the master of one of the best quotes ever outlining true business risk and what it does to many a company: “If you limit your choices only to what seems possible or reasonable, you disconnect yourself from what you truly want, and all that is left is compromise.”

Robert Fritz Said That, and to This Day, It’s the Mantra of Any Entrepreneur Looking to Take on Business Risk

In a nutshell, never limit yourself to what you’re comfortable with — or you’ll deny yourself the possibilities. Risk can do that, and here’s the clincher: sometimes that’s a good thing! But don’t fall into the trap of believing that you should just stick with what ‘works’.

Yes, it sounds smart. Go with what works. If it ain’t broke, don’t fix it. Common adages that make plenty of sense, especially in business. We’re not knocking that at all! But what we are saying is that while these sayings are true, they’re only true in the right situations.

After all…it doesn’t say “go only with what works.” So go with what works in your business according to the risks you commonly take, but don’t be afraid to go above and beyond that on occasion. Test the waters. Research the trends. Grow.

Now if it “ain’t broke, don’t fix it” makes perfect sense, but only if you’re planning on having something operate on its own and works just fine as it is without adding anything to it. What if you want to build something else along with it? Something that’ll make that perfect machine run even better?

In that case, you’re not fixing anything. You’re simply improving. Advancing. And there’s nothing wrong with that.

The Challenge Is Looking at Business Risk as NOT a Realist Factor, But an Opportunity to Have Ideas

So don’t be afraid of taking it. Risk is there for a reason. But it’s not to stymie you. It’s to enrich you. That being said, you can’t be enriched if you don’t have that creativity to reach beyond that business box and find out what’s outside of the cardboard.

In summary, you want to tackle business risk? Don’t be safe. Be creative!

Dr. Bert Shlensky, President of The Startup Connection, directs all small business clients toward maximum sales and profit thanks to his 40 years of high-quality experience. He does this through technological, social, and online integration, supercharging your business success into the next level, so don’t hesitate to sign up for a free consultation RIGHT NOW.

A Great Idea Without Execution is Hallucination

by | Jun 30, 2017 | Operations

Business success tips usually focus on issues like having a great idea, goals, strategy, financial plans, branding, customer service, measurement, operations, excellent people, etc. What is occasionally left behind are simple tips or rules for executing programs. This article describes both the issues and remedies to improve execution and thus, excellence.

“Do what you do so well that they will want to see it again and bring their friends.” -Walt Disney

Detail and excellence are really a culture in an organization and, not necessarily prescribed rules. For example, we sometimes ignore that marketing, excellence and effectiveness are all integrated. Airlines have done a great job automating operations like reservations and customer service to make service more efficient, reduce staff and provide quicker, better service. However, when something goes wrong like 120 degrees weather in Phoenix, they now lack the people to solve problems and literally destroy all the good intent they tried to create.

Your Culture and Perceptions Can Affect Execution

Don’t be afraid to fail. Instead, celebrate failure. Never be complacent. Michael Dell, founder and CEO of Dell Technologies says, “If you are only succeeding than you are not taking enough risks. See adversity as a challenge and look for the opportunity. Stretch yourself.”

In today’s world, you need to exceed, not just meet, the needs of your customers. You only have one chance to make a first impression. 90% of most impressions are made in the first 30 seconds of contact, and thus, less is more. Confidence, attention to details, flexibility, listening and always challenging how you can do better are the foundation of creating great execution.

How Do You Balance Establishing Procedures with the Need for Flexibility and Responsiveness?

Empower your staff and management to fix problems whether you are right or wrong. Knowing the individual “genius” of each member of your team will help ensure that their true gifts are being intelligently deployed and not squandered. And as a result, guarantees your business runs efficiently.

The greatest benefit of forecasting comes from prioritizing the 80-20 rule: 80 percent of sales come from 20 percent of a company’s products or services. Consider that the “chain is only as strong as the weakest link. Great ideas or products don’t offset bad pricing, marketing programs, forecasting or customer service.

There are some simple communications tools that we sometimes forget especially in stressful situations. Learn to say, “How are you?”, “Please” and “Thank you”. Listen and Be polite! These simple gestures reduce tension in situations and create more open discussion of issues.

“A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing. “-George Bernard Shaw

Understanding Change and Trends Can Greatly Improve focus

Internet retailing is growing 15-20% per year while brick and mortar retail is only growing 1-3%. Therefore, the opportunities on the internet are simply far greater than traditional retailers. Execution does not just involve internal staff and management. There are many reasons to consider engaging outside experts and managing them productively, as well as, managing in-house staff. For example, internet marketing, web design, social media, paid search, etc. require lots of different skills. You can’t do it alone.

In summary, maximizing details and execution are critical components of success. Great ideas are critical to provide differentiation. However, you do need the skills, experience and commitment to succeed. Don’t forget Execution!

Dr. Bert Shlensky, president of www.startupconnection.net, offers experience and skills and a team devoted to developing and executing winning strategies for businesses of all kinds. His books for the business entrepreneur: Marketing Plan for Startups & Small Business and Passion & Reality for Small Business Success, are available at www.startupconnection.net.