Taking Care Of Business Part 2

Use other channels to market.

You may be able to increase your sales and market share significantly by using different and/or additional sales methods. You can also use other business' customer bases in some circumstances, eg wholesalers and distributors.

Your choice of additional channels to market will depend on your product or service type and how your customers choose to buy. The key areas to consider are:

Selling direct. You may be able to set up a direct sales operation so customers don't need to go through a third party, such as a retailer or wholesaler. This can be good for your margins as you don't have to pay commission. But you should consider the impact this would have on any third parties that already sell your product or service - they may react badly to you 'going into competition' with them.

Using wholesalers or distributors. If you are selling direct, you can consider broadening your base by using wholesalers or distributors. This will mean you are effectively 'piggybacking' on their customer bases. However, you may need to consider pricing carefully as intermediaries will need to make a profit.

Agents: If you wish to expand into other geographical areas at minimal risk, consider appointing an agent. This can offer representation in areas that would otherwise be difficult to reach. However, you will have to spend time managing the relationship.

Online and e-commerce. Setting up an e-commerce operation can break down geographical barriers. You will need to make some form of investment in getting it up and running and pay careful attention to servicing remote customers.

You can also consider taking larger steps to establish your business in new markets and territories, such as entering export markets or establishing joint ventures and partnerships.

Whichever options you choose, you will need to make them integral to your marketing plan.

Sell into new markets

One of the most radical ways to grow your market share is to move into new markets. The rewards can be significant, but the risks are higher when you contrast this with getting the most out of your existing business and customer base.

Set clear goals for expansion

Before you start, make sure that you have clearly defined goals - it's essential that you set targets at each step of the way. If you don't carefully benchmark your progress at every stage, you can spend a lot of time and money on an unsuccessful expansion effort. If you can't set clear goals, you may be better served trying to exploit your existing customer base more efficiently.

You'll need to spend time researching the market fully, so you understand your potential customers as well as you do your existing customers.

You also need to understand the competitive environment in the new sector you plan to enter - it won't be the same as your current market.

Market effectively

It's essential that you create and commit to a marketing plan. While you can adapt to circumstances as you proceed, you must have a clear framework in place to boost your chances of success.

Remember that you should try to reach the most likely customers first. The best way to do this is to segment your target customer base - which means sorting them into groups with similar characteristics.

Selling overseas

Exporting can have a significant impact on your sales figures but it will also involve trading in a different way - customers are more remote and may need more management.

Team up with other businesses

You can sell into new markets by joining with other businesses, either in formal joint ventures and partnerships or more informal arrangements.

These routes can help get you established in new sectors more quickly and give you easier access to a range of potential customers. However, you will need to spend time managing the relationship and will sometimes have to compromise to keep your partners happy.

Consider diversification

Growth by creating new products or services to sell to existing or new customer bases is inherently risky, but when handled well it can transform a business.

Understand the risks

If you get it right, diversification could be your biggest driver to growth and profitability. Mishandled, it could damage your productivity and relationships with existing customers.

You will need to devote time and resources to research and development (R&D) - this will have implications for your cash flow. You will also have to ensure your customers still receive the levels of service they are used to while you are working on new projects.

Is diversification suitable for your business?

Have you got enough financial and human resources to carry out the required R&D? If not, it may be better to increase your market share through other routes, eg joint ventures or informal partnerships.

Remember that you will also need to keep track of market trends in an unfamiliar sector. Will you be able to react to changes in the competitive environment?

Plan the process

Diversification is like setting up a new business. You will need to understand your new market, its customers, competitors and dynamics, just as you would for any new business.

Key points to consider

Diversification is a big commitment and there are key issues you will need to consider and manage on both a day-to-day and strategic basis. These include:

1. Market knowledge - make sure you understand your new market as well as your existing one.
2. In-house expertise - do you need to hire specialists for the new products and services?
3. Sales skills - do you know how to sell effectively to this new and different customer base?
4. Capacity - can you continue serving existing customers without alienating core customers?
5. Finance - you will need to consider how you will fund the diversification. Will you need investment? You will also have to carefully plan sales and your return on investment.
6. Risk management - are there any ways to minimise the risk to an acceptable level? For example, could you explore partnerships or distribution agreements to ease your entry into the new market?

Here's how I increased market share in Recruitment by winning back old customers

Labour Ready UK Temporary Services was a US owned subsidiary of Trueblue Inc predominantly catering to Blue Collar businesses on a 'work today - paid today' business model to deliver on demand staffing solutions because of this, our margins were typically around 45% for a National Minimum wage temp. With 3 branch staff, and a network of 100+ colleagues around the company to call on for additional support, and a turn over of £30k GBP per week net profit and a further 100+ daily temps out (mostly paid daily) .

I'll explain how a campaign to win back a lost customer led to a complete re-evaluation of the business in my home town and ultimately increased the company's market share.

Here's what I did (Chris Brotherton / Spiller)

Establish what went wrong

Several years ago, following a period of rapid growth, the sudden loss of a large tenured customer, (£350k billing per annum) dealt the branch a major financial blow. After the initial shock wore off, my branch team sat down to analyse what went wrong.

For a start, we hadn't paid enough attention to pricing, each year UK national minimum wage would increase and with it the cost of service would increase too. We had wrongly assumed that because the customer appreciated our expertise and service quality, they wouldn't be price-sensitive. Like a long term girlfriend, we admittedly became 'comfortable'.

In fact, the competitor that took the business off us had a lower-service offering, and couldn't touch us for delivery of service (we opened at 05:30 each morning with temps on demand able to travel to a job and be on site within 1hour typically 40 minutes). They had massively undercut us on price. Although we couldn't afford to be completely price-driven, we should have recognised the threat and done more to offer the customer a better deal before they started looking elsewhere.

Other issues surrounded the loss in relation to competitors walking onto site and signing up temps offering higher wages etc. In truth, our early success had led to complacency - we thought we could rest on our laurels and hadn't spent nearly enough time caring for our long term customers, whilst focusing on generating new business and cultivating bookings of 'one's & two's per day' into '20's and 30's per day'.

Take positive action

Before we re-approached the customer, we went back to basics. We also provided key staff with training in marketing, team working and presentation skills, and launched a recruitment drive for additional sales staff.

When we learnt six months later that our lost customer was having supply problems, we were ready to act. We approached them at first in an advisory capacity, and offered to help them identify the causes of their difficulties from a manufacturing perspective. The work we did cost us money, but it was a worthwhile investment and re-opened communication channels.

From there we put together a sales proposal and took a team of key staff to present it to the customer - the presentation skills training really paid off. Following a series of subsequent meetings, which we rigorously prepared for, we slowly won back the business piece by piece over about 12 months.

The customer returned to full billing on previous years and increased spend by £50,000 to £400,000. What's more, the business improvement we've achieved in the process helped us to woo other customers back into the fold, and to win new contracts, increasing our market share further.

Learn from the experience

The process of winning old customers back really got us focused on service quality for all our customers. As an organisation, we became far more responsive to customer needs and greatly improved our lines of communication.

It taught us the value of teamwork. Before, departments were squabbling about whose fault it was when something went wrong, but proper training and the experience of 'pulling together' to win back business really got us working as a unit. This experience is how I lay my foundations for my personal business projects and in other work.

Chris B.