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Instruct all of your sales personnel to gather as much detail as possible about your direct competitors. You want to find out what your competitors are doing and what new products or services they now offer. You have to know what is going on in the market so you are not left in the dust.
When you do not hear from a customer is when he is ordering from the competitor. Unless your sales people are in there talking to him, you will not know what hit you until it is too late. You must sell every day because the rest of the market is making sure to do so.
Buy your competitors’ products. Look at their products and line them up alongside yours. Buy all of the colors, sizes and different features offered. Which is more fun? Which does more for the buyer? Why? Which is worth more to the customer? Which provides more fun or makes a job easier? The best way to know your competition is to buy their products, use them and then tear them apart to see how you can make them better for the buyer.
Listen to your sales people. You cannot afford to compete blindly because you will ultimately fail and waste a lot of money. Your sales people while thinking of their incentives will come to you quickly with market problems. If they are well paid, they will not hesitate to tell you what competitor A is doing or what competitor B has just announced. Your sales people want to make money so they will not stop to tell you the latest problems that are coming to your firm. Listen to them because they are handing you opportunities to react appropriately and quickly.
Sales people are selfish, which is good. Sales people on good bonus programs will come running to keep you informed. Understand very clearly that they will not inform you immediately because they are worried about you. They will do this because you pay them well and they are worried about their own money. They do not want to be left behind in the marketplace. They do not want to be embarrassed trying to sell substandard products or services no longer attractive to your particular buyers. If you have your sales personnel on lucrative incentive plans, they will be running to tell you what they think you need to do, all out of ultimate greed.
Sales people know the hot items. Sales people want to sell the most advanced hottest product on the market right now, all of the time to all buyers. The first thing they will do is complain about your company’s product if it is seen to be falling behind. Listen to your sales personnel. Most of the time your sales personnel are going to be correct and at least convey to you their description of a changing market.
There is not enough money for you to sell everything your staff wants you to. Always be warned about sales staff requests, whines and rants. When sales people are paid well, they will want you to buy everything possible to give them an edge in the market regardless of cost. They will want to go to customers to brag about new equipment, new product designs, what your firm will be giving away free soon and what new items are coming up early next year.
Sales people relish new information and bringing information to buyers. You must listen to them and decipher what is worth appropriate capital investment and what are signs that the market you are in is becoming saturated with too many competitors. Know when you need to look for new products or new changes to old products. Be smart and recognize the difference and guard the few dollars you have for new investment. Who wants to jump into the market with 639 competitors who have nothing to lose? You do not.
Examples of marketing changes that work:
Example #1: Improving service levels:
- Level #1: An automobile service center advertises that if you buy a car from them, when you bring your car in for service they will provide a daily rental for $20.
- Level #2: Hearing this above $20 offer, a competing automobile service center advertises they will provide the rental to their customers for $10 for the day.
- Level #3: Another automobile service center states if you break down in a car you bought from them, they will come and bring your car to their facility and rent you a car for $10 when you get there, but they will give it back as a rebate once you have paid to have your car fixed by them.
- Level #4: Another sharper automobile service center states if you buy a car from them, they will come to you to tow back your vehicle to get it serviced and at the same time if you wish, bring you a rental car at the same time they pick up your car. Doing this, you can then go to straight to work and they also charge $10 for the rental plus service if applicable.
Example #2: Sell more through coupling: When a supermarket sells broccoli, they have cheese sitting next to the bin. This increases sales of both items and reminds the buyer of uses for product. The same goes for pasta and parmesan cheese.
Example #3: Sell more through coupling: When a supermarket sells fish, there are a bowl of lemons and jars of lemon juice sitting above on the counter to purchase. This increases sales of both items.
Example #4: Sell more through coupling: Supermarkets are great at coupling items to give a perception of greater value of the association. For example many of these items are all put together on a large display near the checkout lanes in order to get maximum visibility. Ideas such as:
- Holidays: Gather everything in the store for Christmas, Valentine’s Day (gifts, ready to go flowers, packaged gifts, boxes of chocolate, wrapping paper).
- Cold / Flu Season: They recognize changes in weather and the colds that come with this (cold remedies, Kleenex, cold tablets, hand washing cleaner, heating pads, cleaning bottles with bleach).
- Graduations: Cookies, cakes, drinks, party materials and supplies, confetti and local university colored candy with matching napkins.
- Christmas/Thanksgiving baking needs: Flour, dried berries, nuts, chocolate chips, marshmallows, baker’s yeast, sugar, refiner’s powdered sugar and sprinkles.
Example #5: Sell more parts coupling: Automotive parts stores feature everything to change oil (oil with oil cans), fix-a-flat containers, jumper cables with flares, repair kits.
Example #6: Make something easier: Pharmacies now leave automated calls on your cell phone when automatically filling your prescriptions that have multiple fill quantities in order that you not take your business elsewhere. Instead of the customer watching the number of pills remaining, the pharmacy takes the responsibility and fills the prescription before you are out.
Example #7: Throw in items free – use the power of perceived value: Machine shops many years ago used to always charge for custom tooling (unique for only the customer), but these days many now give it away after questioning annual volumes. Many will ask that the customer pay for the tooling if a certain volume is not reached in three months or six months.
Example #8: Technology improves and gets cheaper: In order to get a book printed many years ago, one had to buy a minimum run lot of say 500 books and pay a large setup fee. One could not print an initial printing of a new book for less than $1,000 to $2,000. Now one can upload files, pick a cover and print five or ten books and get them within the week for as low as $ 8 to $10 each. The market is nearly upside down compared to thirty years ago with small scale printing companies.
Example #9: Profits made on supplies and not on equipment: In the 1990s, the equipment market for mud pumps and draw works (two major pieces of equipment used on offshore drilling rigs), pricing became so competitive that it became common to sell these huge pieces of equipment to oil and gas companies at prices near or at break-even. Competition was sharp and it reached a point where it was more important to get your firm’s equipment on a rig where it would be used for 20-30 years possibly. The money a manufacturer planned to make was not on the original sale, but on the service parts which were necessary repeatedly sold over the twenty year life.
Example #10: Profits from service parts: Another example of profits that stem from follow up service parts is the money made by printer companies on printer cartridges and not the original sale of the printer. Once a buyer gets your printer, you know he will be buying cartridges for a couple of years.
Example #11:
Profits from service parts: Another example of profits from service parts is for automobiles. If you add the service cost of every part on the car, the cost to buy the entire car part by part is four to five times the original cost of the automobile. This is why knockoff parts versus original manufacturer parts have become popular.
Example #12: When you give new technology away, all competitors are forced to join in. The entire automobile market is an excellent example of introducing new technology into new vehicles every model year and forcing all the other players to have to join in. For example, when all cars came equipped with 8 track tape players, there was one who hurried to install the first cassette player. Once cassette players were in all cars, somebody jumped to install CD players into the dashboard. Now everyone is jumping to install smartphone and GPS connections.
Example #13: Make it easy to buy a condo – sell it furnished. Real estate companies which sell condos along the beach charge premium prices for the view towards the ocean. To justify getting four or five or six times the price per square foot as a normal condo, they have to dress it up and flesh out the unit so you buy it and only have to simply walk in.
The market has changed through the years and the premium units are sold, most of the time furnished and ready to move in. Some have now included a boat and boat dock along with the purchase, free cable for a number of years and a number of other freebies to make life as easy as possible in order to sign the dotted line on the real estate contract. These days you only have to put on your bathing suit and sign your name.
Example #14: Eliminate distance as a cost factor and increase your market. Every once in a while, a car dealership out west will announce it is selling cars nationally and will offer to fly the buyers to their dealership free so they can then drive their new car home. They will even fill up the tank so you don’t have to when you leave the lot. Others have been known to sell you the car and throw the shipping in to your city so there is no difference between the dealership down the street or 1,500 miles away. This was popular when gas was much cheaper along with freight.
Example #15: Buy more and save on a bundled deal. There are a thousand examples of this ‘bundling’. The buyer supposedly saves more when added items are thrown into the overall purchase package, sometimes items the buyer never thought to buy originally. Furniture stores have done this forever. They arrange a room and then buyers look around and see a coordinated room with sofa as well as tables, chairs, rugs and matching lamps. The buyer would languish deciding if they needed more than just the sofa they wanted to buy. The salesman would tell them if they liked the room that they could have all of the pieces including the sofa, love seat, two coffee tables and just for good measure, a couple of lamps, all for a special low price. Now an entire furniture chain has evolved, Rooms-To-Go, which sell hundreds of preselected rooms full of furniture, now these days with a large screen television thrown in to sweeten the deal and primarily to motivate the father.
