Consistently Marketing vs. Marketing Consistency

Don’t “Whack-A-Mole” – When it comes to marketing you can’t be reacting.  You need to be proactive and to have consistency in what you do.  Recently an owner, while talking with the peers in his group, made the comment that all of us consistently market ourselves.  But, when the group was asked the question – How many have a marketing calendar? – only one answered yes.

Consistency and frequency with marketing is key to success.  If you want to establish a brand presence and trust with prospects and the marketplace as a whole, you need to have consistency with what you are doing and communicating.  Consistently marketing is one thing.  Marketing consistently is more accurate and appropriate.  Establish a set of programs and a calendar, and implement it.

Business Is All About Relationships

What is the primary source of your new business? Advertising? Direct marketing? Web-based marketing? Networking? Direct sales?

A group of ten business owners were talking about this during a recent Peer to Peer Advisors meeting. After a long and sometimes boisterous discussion, everyone around the table agreed that the #1 source for new business is referrals.  The referral sources varied, but the most frequent sources were customers, vendors, employees, personal friends, and business acquaintances.

We logically concluded that building this web of relationships should be the #1 marketing priority for any business.  The $64,000 question is – How do you build and sustain a powerful web of business relationships?

The answer is simple – How can I help you? That’s it.  If you approach every relationship with that frame of mind, you will build strong relationships.

Building relationships is not networking.  Networking is the “in” thing to do.  Unfortunately, networking is treated as an activity. Go to an event, meet people, describe who you are, ask what they do, and exchange business cards. Possibly meet outside the meeting. All the while, you’re asking them for introductions, and they’re asking you for introductions. Mentally on some level you’re keeping score.

Building relationships is almost the direct opposite of networking.  Think about the most successful people you know.  They don’t network.  They build relationships.  They don’t ask for help. They offer it. Long term successful relationships are founded on giving — finding ways to make other people more successful.

So let me offer some thoughts and ideas to consider as you build strong relationships.  First and foremost, be authentic.  The quick-hit networking fiend comes off as transparent.  They’re out for themselves, and that becomes quickly apparent.  False front facades lead to short term relationships.

Second, follow through. Don’t offer help to someone unless you really mean it. Your actions will always speak louder than your words.

Third, don’t keep score. It doesn’t matter. What matters is the building of relationships. Relationships founded on a genuine desire to help someone. If you approach your relationships with an authentic desire to help, you will receive help in return. It’s human nature. People like to help each other, and they feel good when they can do that.

Next, be goal oriented.  Set specific goals on what you want to achieve, and assign each goal a specific time frame. Referencing your goals, identify people who can help you reach them. Who are they? Where are they? How can they help? Ideally, identify a person with whom you would like to connect within the next 90 days.

Then get active. Attend events where the opportunity to meet key people might present itself. Research your list and find connections (Google them – it’s simple and it works). Look to the people you already know, and ask them if they can connect you to the people you would like to meet. Reach out through warm introductions, articles of interest, or books they might like to read. Use online social media tools like LinkedIn.

Finally, be respectful of your relationships. In today’s hectic climate, time is the most precious commodity. If you offer someone help, or are willing to make a connection for them, be respectful of the person you are connecting. If appropriate, check first to be sure the person you’re connecting with has the time to help.

Serving the Future

In today’s highly competitive and rapidly moving global economy, it’s time for companies to innovate for survival.  Identify and follow macro-trends, and then get creative in how you service them.

Inc. Magazine (www.inc.com) had an online article on January 26^th (The Best and Worst Industries of the 2010s) about the 10 best and worst industries for the next decade.  The source for their information was IBIS World (www.ibisworld.com), a company that tracks trends and patterns in over 700 industries worldwide.  For most companies, but especially manufacturing companies, there is a lot to learn from the lists.

Let’s begin with the projected worst performing industries.  Six out of the ten industries are manufacturing.  Number 2 on the list is Tank & Armored Vehicle Manufacturing.  That one’s okay with me.  Numbers 8, 9, & 10 are Laminated Plastics, Synthetic Fiber and Wire & Spring Manufacturing respectively.  For me, that’s not okay.  These are traditional manufacturing sectors who are watching their traditional high volume product runs disappear.

Let’s look at the best performing industries for the next ten years.  #1 on the list is Voice over Internet Protocol Providers (VoIP).  Ten years ago, VoIP was virtually non-existent.  Biotechnology (#3) and Recycling (#9) are two other strong growth industries.  Other contenders are industries serving the aging Baby Boomer generation, specifically Retirement and Pension Plans (#2) and Trusts & Estates (#7).  Other technology sectors predicted for strong growth are eCommerce (#4) and Search Engines (#8).

As to be expected, the growth industries reflect the changing and burgeoning trends in our culture.  Technology, Hi-Tech Health, Environment, and Financial Security are all dominant trends in the world today.  And that’s what attracts the money.  Isn’t Capitalism Great!  It identifies a void or need and quickly moves in to fill it.

For manufacturing industries that are on the decline, it’s time to get creative and innovative.  I know one steel processor who reinvented what they made to serve the solar industry.  A non-existent product offering 5+ years ago now represents a strong percentage of their revenues.  For any manufacturer in a flat to declining industry, look at where trends are going, and the growth industries that follow them.  Reinvent what you do to service those growth industries.  And start today.  Because there is someone halfway around the world who is doing exactly that – serving the future.

Counter Intuitive Thinking Works!

I have the distinct pleasure each month to talk to scores of business owners.  I learn a lot.  One of the things I recently learned is that counter-intuitive thinking spurs growth (some may call it crazy thinking).  And admittedly the ideas did at first glance sound crazy, but they work.  So, if you want to grow your business — Get rid of customers — Get rid of products — Raise your prices.  

Get rid of customers.  A commercial printer went from $8M to $12M in revenue in two years while reducing their customer list from over 2,200 to about 240.  Net profit increased by 5% in the same time frame.  A web development company has almost doubled in size, and they are reducing their client list from 300 down to 30.  

They built focus into what they were doing, paying attention to the customers that were the most profitable and the best match for the value the company had to offer.  The printer paid attention to large volume clients instead of everyone who needed printing.  The web development company focused on customers that needed sophistication in the back-end of their site, whether it was online shopping or sophisticated relational databases.  

Get rid of products.  Just because you can offer something doesn’t mean you should offer something.  The most successful businesses own a singular place in the minds of customers.  They offer one thing that the customer recognizes them for, and they dominate that space.  

Foot Locker is athletic shoes.  Cole Haan is high end shoes.  Starbucks is premium coffee.  Dunkin Donuts is everyman’s coffee.  Victoria’s Secret is sexy undergarments.  Hanes is comfortable undergarments. 

Understand what you are really good at; as Jim Collins said in “Good to Great”, what you can be the “best in the world” at.  Focus on that, and the customers who would value it.  Get rid of customers who aren’t in that category.  Get rid of products and services where you can’t be the best.  

Raise your prices.  The key to success with a price hike depends on two things.  One, don’t delude yourself.  You have to be very good at what you do and target customers who value that.  Verify this.  Two, there should be either controlled production or limited production capability.  Without a possibility of scarcity of product, demand will never outpace availability.  

There was a real estate developer in South Carolina who built a Tom Fazio designed golf course, surrounded by very high-priced homes.  Every time the demand for building lots flattened, the owner announced a price hike on building lots.  This produced a spike in sales at the lower price, and the price point for future sales was automatically higher.  He had a limited inventory, and created demand for the product tied to price. 

Sometimes it is worth it to go against your intuition.  Focusing on the right customers with the right products, and setting value based pricing, does produce sustainable and profitable growth.  Hmmm, maybe it’s not as counter-intuitive as you might think.

It’s Time for Collaborative Leadership

Two events in the past week have given me hope.  In CT our good friend Oz Griebel has announced his candidacy for Governor.  In RI Governor Carcieri has appointed our good friend Karl Wadensten to the Board of Directors of the Rhode Island Economic Development Corporation.   Both of these events give me hope because of the type of leadership Oz and Karl demonstrate and practice every day. 

Under Oz’s leadership The Metro Hartford Alliance has grown into one of the most influential Chambers in the state.  But it’s not Oz that did it (and he’ll quickly agree on this).  The power of The Alliance came from the passion and dedication of the people there.  Oz promoted an environment where collaboration and commitment, focused on specific goals, produces great results.

With Karl you have one of the pre-eminent practitioners and evangelists for the power of Lean Processes and Lean Thinking.  At Karl’s company VIBCO they have embraced Lean and produced nothing short of phenomenal improvements and growth.  The most exciting and energizing thing about VIBCO is that all of their gains came from their people.  Collaboration, creativity and innovation are in the DNA of the workforce there.

Now both Oz and Karl can bring their business sense and commitment to collaboration to the State Level.  Even if a little bit of their approaches gets injected into a political system that is currently polarized to the point of ineffectiveness, then the sister states of CT and RI will be the beneficiaries and the winners.

Contrarian Thinking and Collaboration

Stop competing and start collaborating – it will improve your success and accelerate the economic recovery.

 

We all know that business is competitive – it’s bred into us.  We compete from a very early age, be it school yard games, organized sports, or many other aspects of life.  In this economic climate, the competition is even more acute because there is less spending and more companies attempting to capture those fewer dollars. 

 

We also know that contrarian thinking often works well in tough economic times.  For example, while everyone else is tightening down, you go on an acquisition spree.  Or, go against the norm and aggressively market your firm in this time of less spending.  Or, introduce new products and services that further your reach and value in the marketplace. 

 

Now, bring these two apparently disparate trends together – be contrarian and don’t compete, but rather collaborate.  Reach out to other firms and work with them as opposed to competing or remaining neutral to them.  Be honest, each of us only has a true handful of competitors.  Everyone else is just on parallel paths with us, trying to maintain sustainability and growth.  Work with your parallel traveling companions and share what you know, what works, what doesn’t work, and offer to help.  The value you receive from giving will come back to you in significant multiples. 

 

The entrepreneur is the engine that is going to drive this economy for the next 10+ years.  Entrepreneurial fervor is based on the need to control your world and pursue your dreams head-on.  This independence is great.  However, being independent does not mean being alone.  None of us can get there alone. 

 

Collaboration is the great multiplier to accelerate our recovery from this recession.  Be contrarian.  Collaborate.  Elevate your success.  Elevate the success of others. 

 

Top Ten Things to do to Combat the Recession

Over the past months business leaders — peers – have been getting together and discussing specific things they can do to combat the impact of the recession.  Below is a compilation of some of their best thinking and ideas.

 

1. Ask yourself four questions –

What do we do best?

Where do we best do it?

What expenses are necessary to do it?

What assets do we need to do it?

The answers to these four questions define the products, markets, and resources you need to most profitably operate and survive in a tough environment.  Everything that falls outside of the answers to these four questions should be jettisoned or shelved for now.

1. Stay very close to your customers.  Nurture them and protect them, visiting or talking to them almost daily.
2. Focus on your receivables.  The “squeaky wheel” gets greased, and if your client can only pay “3 of the 5 people they owe”, be in front of them so you are one of the three.
3. Closely monitor your cash flow and build as many multiple sources of cash as possible.
4. Your employees are scared.  Stay connected with them and communicate to them the current situation and projections for the business.
5. Upgrade your marginal performers.  Replace them and hire good people because they are available.  Good people are free – their production and return on their efforts exceeds what they cost.
6. Promote and sell in a crisis.  Focus on the markets where you are best, find opportunities in those markets, and sell to them.  Energize your sales team to do the same. 
7. Apply the 80 / 20 Rule to your business.  Focus on the 20% of the customers who give you 80% of your revenue and expand that customer base.  Look at your inventory and sell off the 80% of the inventory that is sitting there costing your money. 
8. Examine the price elasticity of your good inventory.  Determine if the solutions you offer can demand a higher price in the market (and more margin for you).
9. Take a look at all of the lines on your P&L.  Cut expenses where you can, e.g., renegotiate your leases and put in back-end payments for reduced current rates.

 

Lastly, don’t sit still.  Even in a down economy the idle will be passed by those that seek and seize opportunities.

Bridge the Gap for Small Businesses

 

All of us have heard about the $700 Billion bailout of Wall Street.  Regardless of your opinion of it, at least the federal government finally thought like an investor and took equity in the firms to which it was giving the money.  However, the fact that so much money is going to so few firms that collectively self-inflicted their financial calamities is bothersome, to say the least. 

 

I’ve got a suggestion that may make at least part of this bailout a little more palatable – set aside some of the money – say 10% or $70 Billion – for small businesses.  This is needed because the ripple effect of the Wall Street debacle is reaching small business in the form of tightening credit to no credit lines at all.  The banks screwed up, the small business owner is feeling the impact, and the small business should be able to benefit in some direct way from the rescue efforts. 

 

Make the money available in the form of mezzanine (or bridge) type financing.  Mezzanine financing makes sense because it is a hybrid of debt and equity financing. It is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies. So, when the banks finally get themselves sorted out in 1-5 years, they can then take over any remaining debt owed by companies.

Mezzanine financing is usually provided to the borrower very quickly with little due diligence on the part of the lender and little or no collateral on the part of the borrower.  This type of financing is usually aggressively priced with the lender seeking a return in the 20-30% range.   Since the credit crunch is not the fault of the small business owner, I’m suggesting the government offer this financing at much more attractive rates, e.g. around the prime interest rate, or at least the rate for preferred borrowers.  When the banks do roll the debt into their portfolio in the future, they have to honor the original rates.

 

There’s a lot of detail that needs to fill in under this idea.  But on a macro level it offers a sense of fairness, and frankly a better prospect for job creation and financial recovery than investing in Wall Street does.  At least the recipients of the funds are companies that manufacture things and provide services and hire people.

 

The federal government should, just one time, consider putting its money where its mouth is – invest in the small business sector at a level that is significant, timely and needed.  Most politicians say small business is the “engine” of our economy.  Well, it’s time to fuel that engine.

 

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