Paying the Price for Discounting

When times are tough many UK firms react very quickly and discount prices across the board without fully understanding the impact on demand or profitability.  The results should be dramatic and immediate.  But so is paying the price for discounting.  Many industries and companies using discounting fundamentally erode the total value of the market.  Buyers’ and consumers’ price expectations are lower and buying behaviour changes, perhaps forever.  Just look at what is happening to the big retailers over the past 2 to 3 years.

When survival is the key driver, dropping price is an understandable response by the sales force, especially as sales volumes fall. This might be the right thing to do if the product or service you’re selling is price elastic and so long as a reduction in price will increase sales volumes.  So is that good news?

Discounts are usually driven not by an understanding of market dynamics but by sales force incentives.  Sales teams are frequently measured by sales volume, rather than the quality of the revenue they bring in, i.e. profitability.  If a salesman is rewarded for selling more, then the easiest way to achieve that objective is to discount prices.  This may not be the best in the medium term for the business.

All companies, and in particular SME organisations need to look at their pricing processes and controls to ensure their pricing strategy is effectively implemented, reviewed and managed.  Performance metrics should be linked to profit as well as volumes and appropriate controls should be embedded such as target and limit prices.  For example, a stepped approach to discounts based upon actual spend (not planned spend) incentivises every-one.

So if you have to offer discounts, be aware of when, how much and to whom – and equally important for how long. Have you had a conversation with a current customers about levels of discounting and tried to justify what is being offered to them or other companies and why?  It is a very difficult subject to discuss and explain rationally, so be prepared.

If you wish to discuss how to structure pricing and incentive plans that help sustainable growth, or if you would like to explore how CMC can support you through your business journey, contact us via the form below.

Do small firms need a brand?

If you are a small firm or a sole trader, you could be forgiven for thinking that branding is not for you. “Big names spend money on branding, small companies just get on with the job” is a typical response when I discuss branding with clients, in this post I aim to answer the question why do small firms need a brand?

Even if you they do believe in branding, it may come low on their to-do list after vital day-to-day tasks that keep their customers happy and keep revenue coming in. I get this, so how can I convince them that branding matters – whether they are a window cleaner, a solicitor or you run a local IT support firm?

Brand V Reputation

The first thing I do is to tackle the wording. If you were to replace the word “branding” with “reputation” I might get your attention. You care about your reputation, right?

In this context branding is all about the impression you make. If you want to succeed, that impression should do two jobs – it should convey what is special about your business and it should show you in a positive light.

Of course, many small businesses make a good impression most of the time without ever giving a thought to their brand. But think how much more successful they would be if they gave a good impression all the time.

What I am advocating is that you think about the impression you want to make – your brand – and actively take steps to manage it.

Firstly, you must decide what you stand for – what is your CVP (Customer Value Proposition), who you are aiming at and how you want to position yourself. Then you need to make sure that all aspects of your business are in line with this. Look at my recent post on how to create your CVP.

Creating a brand identity

Your brand identity should be authentic for your business, but it need not be any less professional or engaging. Customers respond to original, independent brands – small businesses with their own personality and an engaging story to tell.

You don’t need to spend much, but paying a graphic designer or affordable branding specialist to create your brand identity can be a shrewd investment. Be armed with examples of branding that you like, but remain open to their ideas.

Test your branding before launch; ask potential customers for feedback and make changes where necessary. Your branding should impress. Your brand identity should ring true with your business and its values. Consider how it will look in every environment in which it will be used. Simplicity is advised. Less is more, so limit your colour and typeface choices.

Apply your brand consistently

Your brand should be applied consistently – from customer call handling, social media posts and staff appearance to signage, stationery and website, etc. Your customer experience should mirror your brand promises. For example, there’s no point having reliability as a part of your CVP if you don’t answer customer enquires promptly.

Customers must be able to quickly distinguish your business and understand what it stands for. If you have employees, make sure they realise the importance of branding (provide training where necessary). Consistency underpins all successful brands.

If you want to discuss how to develop your band, simple click below for a no commitment chat

Value Proposition take 2: How to create the ideal value proposition

Following on from my earlier blog on the subject of value propositions, here I take a look at what makes a good value proposition, remember, your value proposition is the number one thing that determines whether people will bother reading more about your products or engaging with your business.

How to craft your ideal value proposition

A key role for the value proposition is to set you apart from the competition. Most people check out 4-5 different options / service providers before they decide. You want your offering to stand out in this important research phase.

So how do you make your offer unique? Often it’s hard to spot anything unique about your offering. It requires deep self-reflection and discussion.

If you can’t find anything, you better create something. Of course the unique part needs to be something customers actually care about. No point being unique for the sake of being unique (“the ball bearings inside our bicycles are blue”).

The key thing to remember is that you don’t need to be unique in the whole world, just in the customer’s mind.  The closing of a sale takes place in a customer’s mind, not out in the marketplace among the competition.

Boosters for your value proposition

Sometimes it’s the little things that tip the decision in your favour. If all major things are pretty much the same between your and your competitors’ offer, you can win by offering small value-adds. I call them boosters.

These things work well against competitors who do not offer them.

Boosters can be things like:

  • Fast / free packaging and delivery
  • Free setup / installation
  • No setup fee
  • No long-term contract, cancel any time
  • License for multiple computers (vs 1)
  • Money-back guarantee
  • A discounted price, for first order
  • Customisable

You get the idea. Think what small things you could add that wouldn’t cost you much, but could be attractive to some buyers.

Make sure the booster is visible with the rest of the value proposition.

Good value proposition examples

It’s tough to find perfect value proposition examples. Probably because it’s hard to create a great one. I find flaws or room for improvement with most value propositions I came across.

I’m also fully aware that I’m not the ideal customer for many of the examples shown below, and all my critique is, is an educated hypothesis (that should be tested).

Here are some good examples along with my comments:

Stripe

Stripe Value Prop copy

Comments

  • It’s clear what it is and for whom
  • Specific benefit oriented sub-headline
  • Relevant visuals
  • Smooth transition into features and benefits

Square

value prop 2 copy

Comments

  • Very clear headline
  • Benefit and action oriented sub-headline
  • Key benefits clearly listed
  • Relevant image

What makes a good value proposition:

Clarity! It’s easy to understand.

It communicates the concrete results a customer will get from purchasing and using your products and/or services.

It says how it’s different or better than the competitor’s offer.

It avoids hype (like ‘never seen before amazing miracle product’), superlatives (‘best’) and business jargon (‘value-added interactions’).

It can be read and understood in about 5 seconds.

For help in designing your value proposition, or a review of your current value proposition simply fill in the contact form below:

What is your value proposition?

Your value proposition is the number one thing that determines whether people will bother reading more about your products or engaging with your business. The less well known your company is, the better value proposition you need. When reviewing marketing plans with my clients, the main conclusion was that missing or poor value propositions is one of the most common shortcomings.

What exactly is a value proposition?

A value proposition is a promise of value to be delivered. It’s the primary reason a prospect should buy from you.

In a nutshell, value proposition is a clear statement that:

  • explains how your product solves customers’ problems or improves their situation (relevancy),
  • delivers specific benefits (quantified value),
  • tells the ideal customer why they should buy from you and not from the competition (unique differentiation).

You have to present your value proposition as the first thing the visitors see on your home page, and should be visible in all major touch points with your customers.

It’s for people to read and understand

Your value proposition is something real humans are supposed to understand. It’s for people to read. Your value proposition needs to be in the language of the customer. It should join the conversation that is already going on in the customer’s mind. In order to do that you need to know the language your customers use to describe your offering and how they benefit from it.

You cannot guess what that language is. The way YOU speak about your services is often very different from how your customers describe it.

The ideal value proposition should be:

The value proposition is usually a block of text (a headline, sub-headline and one paragraph of text) with a visual (photo, product shot, graphics).

There is no one right way to go about it, but I suggest you start with the following formula:

  • Headline. What is the end-benefit you’re offering, in 1 short sentence, you can mention the product and/or the customer, and it needs to grab attention.
  • Sub-headline or a 2-3 sentence paragraph. A specific explanation of what you do/offer, for whom and why is it useful.
  • 3 bullet points. List the key benefits, from the customers perspective.
  • Visual. Images communicate much faster than words. Show the product, the hero shot or an image reinforcing your main message.

Evaluate your current value proposition by checking whether it answers the questions below:

  • What product or service is your company selling?
  • What is the end-benefit of using it?
  • Who is your target customer for this product or service?
  • What makes your offering unique and different?

Use the headline-paragraph-bullets-visual formula to structure your answers.

How to create a winning value proposition?

The best value proposition is clear: what is it, for whom and how is it useful? If those questions are answered, you’re on the right path. Always strive for clarity first.

If your value proposition makes people go “hmph?” you’re doing it wrong. If they have to read a lot of text to understand your offering, you’re doing it wrong. Yes, sufficient amount of information is crucial for conversions, but you need to draw them in with a clear, compelling value proposition first.

I have written more about how to craft and boost your value proposition in this blog

If you would like a review of your current value proposition, or need advice on how to develop your first fill in the form below for a initial review.

Marketing strategy can prime your business for growth

Having a solid marketing strategy is critical for success. All too often great ideas fail because they’ve been marketed to the wrong people at the wrong time, or too much investment has been piled into an area with a low rate of return.

With that in mind, here are five sure-fire ways to avoid the pit falls and turn your business investments into a success story.

1. Know your vision and mission:

First of all, you need to ensure that you know exactly what your product is, what your aims are, and how you plan to get there. Can you explain what you do in a single sentence? It sounds obvious enough, but it’s imperative to nail down exactly what you’re offering. After all, if you can’t explain your business clearly, how do you expect customers to understand what you can offer them?

2. Know your customers:

Before you reach out to audiences, you’ll need to identify who your targets are. It’s a waste of both time and resources to blanket-market to large numbers of people if only a small fraction of them are real suspects; that is, those people in your defined target market. Instead, identify who your core customers are likely to be, by drawing up a customer profile. What’s their demographic? What are their challenges? What are their goals and pain points?

3. Know your competition:

It’s likely that you are providing a solution to a common problem; so the chances are, someone else is doing something similar. It’s worth finding out who your direct competitors are; what services they’re offering; what fees they’re charging; and what special offers and marketing they provide. This will help you to hone your own service, perhaps even single out your own unique selling points, and help you establish where you can improve on the competition.

4. Use data intelligently:

These days the sheer volume of data for marketing usage is incredible. It’s also diverse, complex and changes in an instant. We therefore need to continuously adapt our approach to deal with data effectively—to make it a truly worthwhile investment.

5. Be patient:

Conventional marketing wisdom says it can take between five and nine contacts or brand impressions before a prospect takes action, so plan and execute well thought-out campaigns over time. You may not achieve fantastic results immediately, but clever marketing and nurturing of prospects will reap rewards if you are patient.

CMC Grow Services Icon
Marketing Strategy aids growth

 

Measuring marketing effectiveness – why bother?!

Measuring marketing effectiveness for a company’s marketing activity is essential for ensuring that the benefits are maximised and the cost optimised ….. but how? It’s a well know cliche that “I know I waste half the money I spend on marketing, I just don’t know which half“. Marketing really is like any other form of investment – how much was spent and what did it deliver?

Being able to measure the results (or outcomes) for individual marketing programmes is key. A first step is to understand your sales and marketing pipeline. For a given month, this means knowing the number and value of:-

  • new leads generated
  • quotes you produced
  • orders you closed
  • sales invoiced

It is very easy to manage these pipelines by anecdote rather than hard data. Too many companies don’t quantify how sales are generated across the business. Armed with this sort of analysis you can take a cold, hard look at the incremental effect of any particular marketing activity. For instance you may be running a pay per click campaign on Google. You will be able to see how many clicks were generated, that’s easy, but how may leads/enquiries were produced as a result and can this be traced through to real sales?  Another example would be a telesales campaign where the objective is to get a salesman appointment. How much are you paying for every appointment, and how many of these appointment were successful? A client I work with knows that for every 20 leads he gets, he will quote on average to 10 of these and from this he will close around 4 orders. He knows the value of these orders so can easily work out if the cost of generating the original leads was profitable. Can you do something similar for your business?

I would have to acknowledge that these sort of measures can be difficult to produce, but it is very worth doing. Calculating for instance the cost per sales lead or cost per order will allow the business to focus the most beneficial activity. The feedback from knowing the effect of a campaign means that the activity can be “fine tuned” to improve its performance. A good approach is “to work out which marketing works best… and then do more of it!”. Sounds simple, but good measures are the only way to deliver this.

 

 

5 Rules to Avoid Conflicts in a Family Owned Business

Dealing with employees on a personal level can wreak havoc in a small or family owned business – because conflicts or disagreements are part of many start-ups and family owned businesses.   When it comes to conflicts of interest in a family business,  these matters are more difficult to resolve, because there are three levels of interests namely family issues, business issues, and ownership issues.  A dispute that occurs in one area can quickly cascade into the other areas.

If you are involved in a family business where every day seems like a battlefield, then you should consider outside help as it can destroy family, personal and business relationships forever.  While every business is different, I have put together some general rules for handling employees who are related by blood or marriage.

1.  Don’t put family members on the payroll if they’re not working in the company or canot make a real contribution to the business.  In a start-up or family business, everybody does everything, but you must make sure that everyone has a role and responsibilities that are spelled out and are very clear.  Think very seriously about offering a contract to a supplier who is also a relative = only award contracts based on merit.

2 – Do not create 2 types or classes of employees (family versus. non-family).  No matter how difficult it is do not to show family members special treatment, because in a family-owned business, special privileges given to a family member will demotivate employees and builds up future conflicts.

3 – Communicate honestly and openly with all employees, family or not.  Do not keep it a secret that you have relatives or friends working for you – when it eventually comes out (and it will) you will appear deceitful.  Also, non-family employees shouldn’t feel like family members are more ‘in the know’ about what is happening with the business – effective communication with all members of the organisation is critical.

4 – Do not confuse family decisions and business decisions. For example avoid letting family members borrow company vehicles or allowing them to ask the company’s IT person to set up their home offices.  It is a really bad idea to allow personal expenses (e.g. family trips or holidays) as business expenditures.  The owner manager must keep his business at a professional level at all time.

5 – Establish healthy boundaries between family and business – this especially applies to husband and wife teams.  Agree and stick to some kind of boundary rules, e.g. do not talk about the business after 6pm, at home on the weekends, or during family vacations.  In general, it should be a rule not work with family members on their personal time – keeping the conversation to 5 minutes is OK, but no longer.

Running an owner managed business is very rewarding, especially if you can work closely with family members.  However to ensure conflicts are dealt with professionally and quickly you may need an impartial and objective viewpoint from an experienced business adviser.

If you want to discuss how to grow your business, call 01494 829181 or contact us via the form below.

Taking Control of your Marketing – How & Where should I invest my money?

Even if we do not understand everything a ‘marketing guru’ says, all business people know they need to invest some money into marketing their products or services.

In a digital age, they are many questions.  Should I stop the traditional marketing and invest all my money into digital marketing?  Should I spend everything on pay per clicks and campaigns? Or should I use traditional marketing such as telesales combined with magazine and radio ads?

The Sales Funnel

Regardless of which channel, digital or non-digital,  the sales funnel is key.  Marketers must design campaigns that attract strangers to the company’s properties (website, shops, offices, social media pages, etc.) so they can see what the company offers.  There should be sufficient information and content to engage a visitor to consider buying or making a purchase (education & conversion).  The company must then deliver and service that purchase, making a first time buyer into a repeat customer and an advocate.

Marketing Return on Investment (ROI)

At every stage of this customer journey it may be applicable to use tradition marketing or digital marketing approaches.  The best way for an owner or manager to calculate what is working and continue to invest is by the analysis of the return on investment.  If an expensive pay to click campaign is not bringing the right type of customer to the website, work out why and correct it or stop doing it until you know.

This Return on Investment (ROI) is the metric by which success of a marketing campaign, online, offline or both is measured. Without constantly monitoring, a business cannot improve its marketing campaign to reach its target audience.

So the message is simple. Using an educated combination of digital and non-digital marketing can definitely improve your bottom line.  To find out where to invest your hard earned cash, calculate the ROI by analysing how the spend is delivering and whether it is meeting the campaign objectives.

Online and offline Marketing Channels

To learn how different online and offline marketing channel can work together, check out the infographic below from Colour Graphics.  – You may learn where companies tend to spend their online and offline marketing budgets, and get real results.

 

 Need Help?

Unsure where you should spend your marketing budget for the best result?  If you want some pointers and advice on practical steps to take – call Phil on 07720 397040, fill in the form below or email him for a free risk free meeting.