Be an Ethical Entrepreneur, Marketer, and Business Builder

How to fix your business FAST – Part 4 – Improve Marketing and Sales

For most businesses I’ve encountered, the greatest improvement in marketing would simply be to start tracking your ROI. In other words, you need to know your cost/lead and cost/sale for each marketing project. I address this concept in detail in my blog on Scientific Advertising.  Keep in mind that simply asking your customers “how did you hear about us?” can be somewhat futile (though it’s better than nothing). Michael Corbett suggests simply watching your sales to see if they go up with your current marketing or stay flat. To me that seems like a rather unscientific approach since that doesn’t tell you which marketing produced the results and there are  more factors than marketing alone that can affect sales.

There are a handful of marketing books in my Recommended Reading section, in addition to My Life in Advertising and Scientific Advertising by Claude Hopkins, so I’m not going to directly address the difference between good and bad marketing. After all, no one knows exactly what will generate the best response until it’s tested and measured.

That being said, here are a few marketing pointers in addition to knowing your numbers:

  1. Have a Unique Selling Proposition that sets you apart from all of your competitors. In other words, create a niche only you can fill.
  2. Know and understand your target audience. You can have the best offer, and the best advertisement in the world, but if it’s directed to the wrong audience you’ll get zero results. Spend the most marketing time on getting your message to the right people!
  3. Keep a detailed customer database so you can cross-market constantly. If someone has bought from you once before, they are MUCH more likely to buy from you again. If you don’t have a database (or your not using the one you have) change that immediately!
  4. Offer a guarantee. If your products are either more expensive than most, or can’t be touched by the consumer prior to purchasing (such as with internet sales) you MUST have an iron-clad guarantee to assuage their fears. This must demonstrate that you’re the best and the customer has nothing to risk.

Since we’re looking for quick fixes, I’m going to stop the list there. If you do those things, you’ll notice results almost instantly.

On the sales side, you need to again, learn your numbers. Am I getting that point across fully yet? 🙂 Whether you realize it or not, in your sales cycle, there are many steps. Let’s take a retail clothing store for example. What are the steps a shopper takes?

  1. Window browsing – How do we get them to actually walk into the store? A lot of retailers put up blinds behind the window manequins so people have to actually walk in to see what else is available.
  2. Entering the store – How do we get them to spend time looking around? Depending on your clientelle, music can make a huge difference as to whether they hang around a while or not.
  3. Perusing certain racks or aisles – How do we get them to see the most we have to offer? Most retail stores put the clearance and discounted rack at the back so you have to walk all the way through to find the great deals.
  4. Trying clothes on – How do we get them to go to the dressing room? Keep in mind, people can only try on or buy as much as they can physically carry. Make it easy for customers to carry more with helpful sales associates and people will buy more. Paco Underhill addresses this in magnificent detail in Why We Buy: The Science of Shopping.
  5. Buying – How do we get them to come back? Are we getting their name and email address for our database?

So why do we break that up into so many steps? Because if you don’t, you have no idea which steps you need to improve. I’ve heard of a retail store that learned that around 80% of people who try something on will buy it. So they didn’t work on directing people to the cash register, they worked on getting potential customers to the changing rooms.

Every business has a series of steps in their sales cycle. You need to learn and track each of those steps for your business and then systematically improve the conversion rate for each one.

That was  a retail environment, so let’s consider a service based business. What possible steps do we have for them?

  1. Inquiry – via phone, web, or walk-in
  2. Service Pitch/Presentation – Are you skipping this step? If people call your plumbing business and ask what it costs to unclog a toilet, do you just tell them or do you first tell them why you are their best option with your guaranteed time, flat-rate billing, and professional staff?
  3. Price Quote/Estimate – Are you building value along with this quote (particularly if it’s in writing) to back up your pricing?
  4. Commitment to Purchase – If the commitment isn’t made immediately are you leaving them PLENTY of information to convince them you’re their best option? My business has a 24 page “leave-behind” packet for just such instances.
  5. Delivery of Service – Are you delivering exactly what you said? Particularly if you only get paid once your service is complete.
  6. Payment – Do you have simple payment options and are you asking for payment immediately upon completion so as not to tie up your office staff trying to collect money?
  7. Follow-up – Did you get their name, phone, address, and email for your database? Did you call or visit them again after completion to make sure they were completely satisfied? Did you ask for testimonials or referrals?

As you can see, there are a lot of steps in this process as well and at any step along the way you can lose potential clients. That’s obviously why tracking the number of customers who make it to each step is so important!

A couple of things you can do to help improve each step in the process:

  1. Have excellent training for each person involved in sales including detailed scripts, role-playing, and NLP training.
  2. Incentivize and develop some competition. People like to know someone else notices that they are the best at what they’re doing.
  3. Have an outside company shop your business and report back what they find.
  4. Record phone calls, conversations, and customer interactions (after checking with your lawyer of course) to look for opportunities for improvement.
  5. Provide on-hold and/or in-store marketing over the speaker system. I know the “blue-light” specials weren’t enough to save Kmart, but I’m not claiming that’s all you need to do for your business either. 😉
  6. Create your story portraying your commitment to customer service, quality, community involvement, and excellence. Make it available in your store, restaurant, business, and on your website. People love buying from places where they feel a part of something.
  7. Include testimonials everywhere! Put them in your store, on your website, in your marketing, on your thank you cards… heck, you can even put them on your receipts.

In my experience with over 100 small businesses, I don’t know of anyone, myself included, who is doing all of these things well. In my defense, I do know what I have to do and one-by-one I’m crossing them off of my list.

We’re on Part 4 right now so you should have quite a long To-Do list written down, right? If not, go get a piece of paper and a pen, review my last 4 blogs and start writing. After I post my last blog on this topice (Part 5) you’ll now have a complete list that you can prioritize and start addressing.

To your sales and marketing success, Bryan

Shopping yourself – The best way to improve your business' conversion rate?

By shopping yourself, I simply mean determine exactly what your customers experience, record it, and review it to determine areas for improvement.

Paco Underhill actually wrote a great book titled, Why We Buy: The Science of Shopping, that talks about much of what he has learned through his Mystery Shopper business. His book and experiences are all geared toward improving retail closing ratios or conversion rates. In other words, he wants to figure out how to get the highest percentage of people to buy the most often. He doesn’t help with marketing or lead-generating in the sense that he helps get people into the stores, his business simply specializes in converting those people who have made a trek to your store into customers (or repeat customers).

Why do you NEED to invest so much time and money into your conversion rate? Because leads are expensive! In my business, leads cost around $78. In other words, to get someone to call me and be interested enough in our products to provide their name and contact information costs me $78 per call ($159 per call for Yellow Page contacts).  To convert those to sales costs me around $268. So right now I’m converting 1 out of every 3.5 prospects who call me into customers. As you’ll learn, these numbers are never perfect and this doesn’t include people who call me for service of existing equipment or to purchase ancillary products. This is simply the people who don’t have anything I offer right now and want it.

Now what do I stand to gain from increasing our conversion rate? Potentially thousands of dollars in revenue and profit. Since some of my new customers are rentals (or equipment leases) and some are sales it’s hard to get an exact “average dollar sale” of my new customers however here’s how it breaks down for new customers in 2009:

  1. Average new sale – $3798
  2. Average new monthly rental/lease – $52.78

Roughly 24% of new customers are rental/leases but let’s ignore that for a minute to keep the math simple. If I can increase my conversion rate for sales by 10% so that 1 customer buys for every 3.15 people who call (instead of every 3.5) that would have added about $32,283 to my business this year. In addition, though my cost per lead would remain the same at $78, my cost per sale would drop to $249 ($241 if I assume a 10% increase for both sales and rental/leases). To say that an even simpler way, increaseing my conversion rate by 10% results in a direct increase in gross profit of 10% on all of my sales. Not bad. And don’t forget we just increased our top line revenue at the same time so my actual Net Profits just increase by much more than 10%.

In the past I’ve reviewed how to increase your conversion rate. Since I’m always looking for new ways to do that, I’ve bumped into Paco Underhill’s book and into a company called teleXpertise. teleXpertise does the same thing that Mr. Underhill’s company does except they do it over the phone. They’re phone mystery shoppers and I must say they’re very good. Their recorded calls with your sales people will tell you a whole lot about the efficiency of your sales process. My business model requires onsite inspections before quoting prices so our process can be quite lengthy from the first call to a closed deal. Keep in mind that every interaction with the customer is a potential step where they can be lost forever however each step does not result in a sale… So each and every step has to be improved. To clarify what I mean by “steps” you’ll want to check out my blog on increasing your conversion rate.

Let’s talk a bit more about how they can help you increase your conversion rate by evaluating what I’ve learned. Keep in mind that I have my sales phone calls scripted and have gone over individual training with all of my team members on how to handle sales inquiries and the following still came up:

  1. Answering questions that we didn’t know the answer to. (though we thought we did)
  2. Not asking for the caller’s name or contact information (including email).
  3. Answering questions that we shouldn’t (because they’re based on what information we gather from an onsite inspection)
  4. Quoting exact prices over the phone
  5. Not using proper NLP techniques
  6. Didn’t always ask about what prompted them to call us

And what we did right:

  1. Cross-sold products (i.e. they called asking about X and we told them about Y)
  2. Tried to set the appointment with the customer (several times)
  3. Returned the customer’s inquiry within minutes (our lead catchers don’t set appointments our sales people call the customer back to set the appointment)
  4. Upsold products (i.e. they called about a service we didn’t offer and we suggested a better alternative)
  5. Differentiated ourselves from our competitors

So you can look at this information in 2 ways.

  1. After all that training we still did more things incorrectly than correctly so we suck (me in particular as the Team Leader).
  2. After all that training we still did more things incorrectly than correctly so just look at how much more money we could make if we always did things correctly!

Obviously I focus on the latter. It’s one thing to do the right thing by training and scripting, but it’s just as important to constantly train and improve. What was most surprising to me was I didn’t tell a single person on our team that we were using mystery shoppers until after they were done.  When I did tell them their conversations were being recorded they weren’t at all mad about it, they were actually excited to hear themselves. This may be partially because I set the bar for myself to constantly improve so I’m not asking them to do anything they haven’t seen me do over and over again and I stressed that before I told them what was going on. I also let them know how much we pay for leads so they can get a grasp of just how valuable each and every call is. The best part, however, was that they were very receptive to improvements and looked forward to doing better next time. That’s right, I assured them their would be a next time… 😉

To your increased conversion rate success, Bryan

P.S. As an additional note, if you’re buying a business you should definitely Mystery Shop the business ahead of time. If they did more right than wrong you may want to look for a different business. If they have a LOT of room to improve that might be the perfect business for you. Keep in mind that you prefer to buy businesses that just need to tweak the front end.