Five Fatal Business Mistakes You Don't Know You're Making
Oct 23, 2008 12:00AM
By John Haskell aka Dr. Revenue®
Business is tougher today than it was ten years ago.
Recently, a mid-sized company evaluated its situation: It faced a quickly shrinking market, and people just weren’t buying as much. Competition was cutting prices in spite of higher costs. Salespeople were losing business all over the country. What options did they have to improve the business? They started by asking themselves two questions: First, what were they currently doing? Second, what had they not done in the past?
Five specific areas tend to stand out in examinations like this. Individually, each is a problem; collectively they can spell disaster for your business. Luckily, it isn’t impossible to eliminate these mistakes, as long as you have the discipline and desire. Here are the five fatal business mistakes you could be making:
1. No Marketing Plan
The marketing plan is the starting point, as it allows the entire company to know the tactics to achieve the goals. There is only one cure for this mistake: Write a plan. The format is simple:
- Goals: Establish your goals. These need to be hard-edged goals; avoid marshmallow marketing, such as soft sales targets, undefined goals, weak market data, ineffective advertising and vague promotion schedules. Marshmallows kill!
- Problems: Identify the major problems that stand in the way of reaching your goals.
- Opportunities: Spell out the opportunities that offset the problems. For example, you may not be well-known, but there is an opportunity because those who do know you like your company and your products/services.
- Strategy: Define a longer-term strategy – this is the “What?” statement. What do we want to be four or five years down the road?
- Tactics: Define your tactics very specifically. This section of the plan, accompanied by a marketing calendar and at least an adequate budget, provides the road map for execution, which leads to sales success.
This simple prescription for constructing a marketing and sales plan makes it easy – you write to the outline. Take your time and fill in the blanks. Start with opportunities. Then sort the opportunities in order of priority.
2. Weak or Non-Existent Factual Understanding of the Marketing Environment
Every company has a position in the market based on specific attributes. For example, a cookie company judges its position by the taste, price, size, and location compared to nearby competitors who are making a similar product. These facts provide many opportunities to get insight into your position in the market.
Narrowing them down to black and white, analyzing the vital differences and planning how to respond to the competitive environment is the prescription for success.
3. Lack of understanding of your customer’s real buying motivation.
The psychology of the customer is vital to marketing and sales success. Small businesses may not be able to afford extensive marketing research, but simple questionnaires and low-cost focus groups can deliver the vital data that allows a company to build marketing, merchandising, advertising, and sales promotion tactics that work. The prescription has three parts: do the research, listen very carefully and, most importantly, act decisively for the long term.
4. No Sales Forecasts
Planning for the business begins with a sales forecast. If the management team does not look forward, they will get constant surprises.
Forecasting in most smaller and mid-sized businesses can be confined to customers who contribute a significant percent of sales. Building a forecast for a customer involves a careful, in-depth analysis of the customer’s business, the customer’s relationship with your company and the customer’s marketing plan for the next year. The only person who should do the sales forecast is the salesperson who is closest to that customer.
Each salesperson must forecast for his or her major customers with a fill-in the blanks, paint-by-numbers approach. There are no excuses. The forecast must be completed by a specific date and the salesperson must be prepared to discuss the rationale behind the forecast. Let the chips fall where they will The difference between the sales group’s forecast and the management’s goal for the year is called the “planning gap.” Filling that gap is what marketing and management are all about. The marketing team’s job is to eliminate excuses by salespeople.
5. No Sales System
Sales management is key to success. Effective selling is the result of a complete system. Effective salespeople are “self-managed professionals.” Self-managed professionals know that phone calls must be organized beforehand, records must be kept and selling is a disciplined process.
Effective, professional selling is based on utilizing the company’s marketing program to create a working marketing and sales plan for each significant customer. The self-managed professional salesperson has a game plan for every 30-day period. He or she works the plan every day. Every phone call and every visit is designed to further the plan. Becoming a self-managed professional salesperson starts with this statement. “I know my customer, I know my company's products and I know my company’s marketing plan. My job is to bring these three elements together into a short- and long-term plan for each of my best or potentially best customers. I sell products that will not come back to customers who will.”
Eliminate these 5 Mistakes
Eliminating these mistakes allows a business to solidify its position in the market and move forward regardless of the economy. Very few companies have large market shares. Therefore, if your company has eliminated these mistakes and is moving forward, you are positioned to take a little business from each of your competitors who have not eliminated the mistakes. A little here, a little there and you are doing more than holding your own –you are growing your share of market. When the economy bounces back, you will reap tremendous benefits.
About the author:
John Haskell, aka Dr. Revenue®, is a professional speaker, seminar leader, marketing and sales consultant and author of “Profit Rx.” As a former CEO/COO of divisions of Fortune 500 companies and as president of The Professional Marketing Group, Inc., he consistently demonstrates the value of written marketing and sales planning. He helps his clients write and implement marketing and sales plans, and his “Dr. Revenue Marketing and Sales Clinics” result in immediate sales and marketing focus. For more information, visit www.drrevenue.com or e-mail [email protected]