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.

Business Planning is a Process (Not a Formula)

by | May 3, 2018 | Planning

Creating a business plan is a lot like forecasting the weather… those who are in charge of predicting a storm get blamed if they are not 100% accurate. The same logic applies to business planning in terms of timing, expediency, and execution. This can lead many business owners to abandon ship, rather than seeing it as an opportunity to change course.  Always remember, business planning is a process.

Carl Schram, former head of the Kauffman Foundation for Entrepreneurship, recently wrote Burn the Business Plan, which echoes a similar strategy for a streamlining the planning process. Reis and Schram are mostly right to criticize excessively lengthy business plans. At Startup Connection, we argue that business plans are necessary, but that they need to flexible and dynamic (and meant primarily for yourself, not others.) As the saying goes, “If you don’t know where you are going, any road will get you there.” Making plans for others (especially venture capital firms) and following specific rules almost guarantees the process will not be useful to you. In addition, venture capital firms account for a very small segment of business financing, especially in the beginning. A business plan is not just a document to be stored on a shelf; it should establish parameters and be developed, tested, and be continuously revised. Even with a “perfect” business plan, there will be failures along the way. In particular, failing and learning from failure are critical components of the ongoing planning process.  Business planning is a process.

Some Planning Suggestions

There is no cookie-cutter approach to writing a business plan. Get your ideas on paper before stressing about the organization of information. Don’t stifle yourself. Write it in your own words, as simply and concisely as possible.

Focus on your passion. A successful business plan should express why you think your business is a good idea and why you will succeed. If you need to dress it up in a suit and tie to show to investors, do that later. A business plan should be YOUR vision.

Common Parts of a Business Plan

Every business plan is different because every business is different. However, there are some common elements to consider, such as:

  • Mission statement
  • Goals
  • A description of products and services
  • Ideal customer
  • Analysis of the industry and your competitors
  • Marketing and sales tactics
  • Operational plans
  • Manufacturing and delivery logistics
  • Resources necessary (this includes labor, equipment, and facilities)
  • Financial budget

Also, focus on the components that are most important and challenging, rather than worrying about making every section perfect.

Some Further Tips

  • Don’t be too verbose: A formal business plan must focus on the needs of the audience and the entrepreneur. Business plans must be on point and clear. Typically, plans should be 15-30 pages. If additional details are required, put them in a short appendix.
  • Think it through: You might have a great idea, but have you carefully mapped out the steps you’ll need to make the business a reality? It’s worth investing your time in the planning phase to ensure you might make money in the long run.
  • Do your research: Investigate everything you can about your proposed business. Google and Amazon are great and easy tools to understand the market and your competition.
  • Be realistic about your competition: Is your product or service something people really want or need, or is it just “cool?” Why do you think people will buy your product or service?
  • Get feedback: Obtain as much feedback as you can from trusted friends, colleagues, nonprofit organizations, and potential investors or lenders. You’ll know when you’re done when you’ve heard the same questions and criticisms again and again. The goal is to have a good answer to almost everything that can be thrown at you.

Completing the business planning process can be challenging, but it should also be interesting, productive, and satisfying. The hardest part is developing a clear picture of the business that makes sense, is appealing to others, and provides a reasonable road map for the future. Another challenging aspect is integrating your products, services, customers, marketing, operations, management, and financial projections seamlessly together. However, these pieces should not dilute your enthusiasm to succeed.

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.

Is Your Pricing Too Cheap?

by | 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.