SHOOTING FISH in a barrel
Aug 1, 1999 12:00 PM,
In 1986, our company was awarded a contract to provide low-voltage systemsfor Sprint (previously GTE Sprint) nationwide. Of course, there was asimple problem of geography. We were based in the Washington D.C.metropolitan area, and GTE Sprint was headquartered in Burlingame, CA(Silicon Valley). Part of the contract required our opening an office inSilicon Valley. It made good business sense, especially because Burlingamewas the source of its purchase orders. That is when I stepped up to theplate, deciding to open our California office to support the Sprintoperation and expand our sales. Although it was a formidable task, I wasready.
The first thing I did was to perform basic market research. I flew out toCalifornia to check out the economic ecosystem and find out what I wasgoing to encounter. I had never seen anything like it. The economy was redhot with buildings going up everywhere. Like today’s booming economy, itlooked like the party would never end.
Then, I researched the competition. To my surprise, I discovered that mostof my competitors were order-takers and invested little in marketing orbuilding a sales force. When I pulsed one of my future competitors on whyhe did not invest in marketing or sales, he said, “I’m too busy takingorders. It’s like shooting fish in a barrel. Besides, the party will neverend.”
Three months later, I relocated to Silicon Valley. Guess what? The partyended. The bottom had just fallen out of the PC market, and Silicon Valleywas laying off 25% of its workforce. Bankruptcies and vacant office spacesprouted up like dandelions.
What happened to all of my competitors who were professional order-takers?When the phone no longer rang with clients placing new orders, theirbusinesses went into cardiac arrest. Many of those who lacked a marketingand sales program went out of business. Others just simply contracted intoa fraction of their former size.
The importance of marketing
That brings us to today. If you believe the pundits, the current expandingeconomy will never end. Every company I talk to says, “Alan, we’re so busy;it’s like shooting fish in a barrel.” As in the 80s, many of thesecompanies are ignoring the value of the major lesson learned during thelast recession – theparty will not last forever, and no one can predict thefuture, so be prepared.
One of the best ways to be prepared is to develop and implement a soundmarketing plan, which will accomplish a great deal. It can identify a giventarget market. If you are going to hunt, you had better know what you arelooking for; otherwise, you will starve. A key component of identifyingyour target market is accepting the fact that you cannot be everything toeverybody. This approach will dilute your resources.
Additionally, a good marketing plan will support the sales effort andgenerate leads and sales. Proper marketing will make the market aware ofboth your company and the different services you provide, but anysuccessful plan must also generate leads and prospects that eventually canturn into sales.
During the 80s, our marketing plan consisted of only advertising. Wemistakenly believed that marketing involved advertising exclusively. Byfollowing this definition, we essentially flushed tens of thousands ofdollars down the drain.
After our financial fiasco with our old marketing plan, we re-examined ourapproach to marketing. We first recognized that advertising was not theonly part of a marketing program. Although advertising can be a component,its effectiveness is limited for low-voltage integrators selling systems.
Next, we developed a written plan that included a series of tasks,deadlines and, most importantly, a budget. A budget is essential because itoutlines your objectives and the means to achieve them in writing. How muchshould you budget for marketing? Although this number varies from companyto company, a general rule of thumb is 1% to 2% of your annual sales.
The best components
People always asked me what worked for me at my previous company when itcame to marketing. By defining worked as generating leads and sales, therewere two components that worked extremely well. As a systems integrator,the biggest return on investment came from hosting our own golf tournament.Although I was a non-believer at first, my vice president of sales saidthat a golf tournament coupled with a light technical seminar would yieldhuge results. When he first proposed a golf tournament, I responded byaccusing him of being crazy, but we followed his advice and invested nearly$5,000 to host our own tournament. Over the next three years, we generatedmore than $1,500,000 in revenue from our annual golf tournament, primarilybecause the key decision-makers always have time for golf.
The second marketing approach that worked miracles for us were newsletters.The great thing about newsletters is that they educate your clients andprospects on the different services and products you offer. Most important,as written material, they get passed along to different departments,further multiplying their effect and increasing sales. A professionalsoft-sell newsletter is not easy to do, and it requires discipline, but theresults can be tremendous. For my previous company, newsletters createdmarket awareness as well as bona fide leads and sales.
Will the party end? If you study history, you already know the answer.Those companies that survive the downturn will not only be taking orders,but also developing relationships and market presence.