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What Do High Growth Businesses Do Differently?

Over the past 5 years the importance of the “High Growth Business” and how this relatively small group of businesses disproportionally impa...

Friday 27 November 2009

Taking Your Business to the Gym-How to be successful: Give your customers what they want -Positioning

Giving your customer what they want requires business owners to understand to which type of customer they are selling; this is called positioning. Positioning is one of the least understood tenets of marketing and is critically important in getting your business on the right footing to make the best of any given market conditions. It is surprisingly simple to understand the positioning of your business; at the very basic level you need to decide if you are going to be a value provider like say Asda, a broad middle market supplier like Tesco, or a premium provider like Waitrose. Now they all sell the same wide range of products but there is no mistaking in peoples' minds their positioning in the market.

Why is positioning important? Customers like to be confident that they are going to buy products or services from suppliers who have similar aspirations to them, so if you're interested in quality and service you'll be prepared to pay more for an equivalent product than someone who's mostly interested in price. More importantly someone who prefers Waitrose will be just as unhappy shopping in Asda as a person who prefers shopping in Asda would be shopping in Waitrose. This is a simple but really important concept especially as most business owners consider that pricing is the dominant reason for purchase decisions, when in reality it is not.

Let me give you a really extreme example to drive home this point. A kennel and cattery in a fairly poor area North East of England was struggling to make money and initially hired a manager to help with finances. However this new manager persuaded the owners to tap into the fact that pet owners love their pets more than anything. Consequently they went from positioning themselves as a non descript Kennel to a very up market "Pet Hotel". Obviously that meant they had to offer better services, but by tailoring their offering to each customer by having a menu of services they went from a struggling Kennel charging about £6:50 per night to a very successful "Pet Hotel" able to charge a base price of £40 per day in high season.

The moral of this story is to truly understand what you customers want, then you'll have tapped into a successful business.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business.We help Business Owners improve the profit performance of their business

Monday 9 November 2009

3 Steps to Successful Sales Forecasting

In most businesses this (the 4th) quarter is the busiest and much sales effort is focused on getting the best results from these critical weeks. However good sales managers are also preparing get to grips with next year's sales targets. This is an important activity because the earlier issues are identified the more time there is to adjust strategies to meet them. Whilst it is important to continue to focus on getting the numbers for this year, for sales management it is vital to understand the nature of the challenge for next year. This analysis is as relevant for the owner managed business where the MD is often the sales manager, as the larger organisation where is has a well developed sales function.

Often it takes a month or two to re orientate your sales activity and doing it now (in Q4) gives 12 months to shoot for next year's target rather than maybe 9 or 10 months if left till the first month of the New Year.

Putting together a simple forecast requires one to break projected sales down into 3 areas, Known, Seen and Unseen. So what do these 3 categories mean? What is their significance? Let us look at each one in turn. This forecasting method is really only applicable to B2B sales, retailers have to use a different method which will be the subject of a future article.

Known sales are those which come from your existing accounts, so you can, based on previous years, fairly accurately estimate your income for the coming period, whilst we all know that individual account incomes vary from year to year it should be possible to approximate the likely revenue. This number for most businesses this will represent a large % of the overall target

Seen sales relate to a category of sales which estimates income based on the long term pipeline and an estimate of what percentage of sales tend to come from new business. Typically this would be the total value of the pipeline factored by the likelihood of success.

Unseen sales comprise that proportion of the sales target where you have no indication of where these sales are coming from. These are, t0 paraphrase Donald Rumsfeld, "unknown unknowns" This element represents the risk in your forecast. The larger the percentage of unseen sales, the more risk there is in the forecast.

Once you have these figures it should also direct you where you need to concentrate your sales effort be that new business development or maximising revenue from your base accounts. If you're trying this for the first time don't be too cautious in forecasting revenue, there should always be an element of unseen in the forecast depending on the type of business it can vary between 10-35% as a norm, anything more than that would indicate that the forecast is too optimistic and is unlikely to be achieved.

Forecasts have to support management objectives but if they are too unrealistic the sales force will very quickly find this out and the target will be disregarded and there will be no real attempt to achieve it. Accurate forecasting is nonetheless an important component in managing your business and an important tool in how it will be developed.

ExigentConsulting specialises in providing Business Turnaround, Sales, Marketing andMentoring to the Small and Medium Business.We help Business Owners improve the profit performance of their business