Sales and Marketing Smarts

How strategic thinking can help you refocus your operation and target market to gain more customers.

BY H. DOUG PLUNKETT

In Arthur Miller’s 1949 play “Death of a Salesman,” veteran salesman Willy Loman gives audience members an inside look at the sales strategy of generations past. I don’t think Willy ever really knew what he was selling, and the audience never learns, either, because it is never mentioned in the play. His entire life, he sold simply with “a smile and a shoeshine.”

You can’t sell with only a smile and a shoeshine anymore. Today, if your company does not have a really viable strategy with a sustainable competitive advantage, you simply will not be effective.

When I joined rms Company in 1994, our annual sales were well under $50 million. We were a job shop at the time, so we made a lot of medical-type products for customers, but we also made aerospace, computer, and general industry-related products. We had about 90 customers. Unfortunately, we didn’t have an effective strategy, so we often ended up competing with other companies to offer the lowest bid.

Though it was risky, we made a decision to narrow our manufacturing focus to nothing but medical implants. By having a more specific niche, we could build our reputation and target a more specific corner of the marketplace. Of course, you can imagine the conversation when we called the parent company and said, ‘We have over 90 customers, but want to eliminate 50 of them.’ Despite their concern, in a six-month period, we reduced our customer base by more than 50 percent.

It was a gutsy move. We had to redefine our operations, sales and marketing strategies. But since the mid-1990s, we have gone from less than $50 million in sales to an estimated $140 million in sales by the end of this year.

Stumbling Blocks
In my 30 years in this industry, there are a couple of common mistakes that I’ve noticed as I’ve talked to small manufacturers. Number one, which is a real problem, is that many of them lack a true sales function. Instead, the owner, general manager or head engineer is doing the selling while simultaneously figuring out the manufacturing process. There is no continuity in the field, which makes it difficult for long sales cycles. No sales function also means that you don’t have a specific vision for your ideal customer or target market, which makes it a challenge for you to promote your business effectively.

Secondly, many of them cannot say no to a sale. In the drive for growth, they cater to every customer request and move off their strategic path, which ends up hurting the company’s sustainable competitive advantage in the long run. If you have a strategy, you’ve got to stick with it, and that is going to mean turning some business away if it doesn’t fit that strategy.

A good business strategy can serve as your company’s identity or niche. It’s what the company becomes known for among your customers, and it’s what your employees associate with the company’s mission.

Part of a good business strategy entails a good marketing strategy. Smart marketing, in my mind, really answers two questions: What are we selling, and what is the customer buying? Of course, that is much easier said than done. A couple of years ago, I was fortunate to get in a cab with the vice president of marketing for a cosmetic company in New York. He had just come from a brainstorming meeting and he said, ‘You know, we just had a real a-ha moment at this meeting.’ He asked me, ‘What do we sell?’ and I said, ‘Well you sell makeup.’ He said, ‘We do sell makeup. But what our customers are buying is hope.’

In our industry at rms, where we sell parts to medical companies, I think what the customer is truly buying is security. Our customers don’t want a recall. So one of our jobs is to convince them of the reliability of our products. Take a look at your products and services. What do you sell? Then, take a look at the same products and services from your customers’ point of view. What are they buying? This will guide your company’s marketing efforts in the right direction.

Here are some additional exercises that can help you to develop your own strategy.

Define Your Strategic Statement
In a 2008 Harvard Business Review article, David Collis and Michael Rukstad write, “It’s a dirty little secret: Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If they can’t, neither can anyone else.”

In refocusing your business, it is essential to define your strategic statement in order for your employees and your customers to understand the ends and means of what you want the business to accomplish. A strategic statement is a straightforward explanation that contains three elements. First, it should state the long-term goal of your business. This could be a revenue goal or a profit goal. If you’re a start-up company, it may even be getting a product to market or breaking even. If, like rms, there are some locations you do not sell to, it should also list the geographical boundaries of your business. Most importantly, it should be a very concise statement explaining why the customer will (and should) buy from you and not from your competitor.

When creating your statement, you must look at it not from your viewpoint but from a customer’s viewpoint. I know a thousand engineers and entrepreneurs and inventors that have created the greatest strategic statement in the world to them, but it doesn’t mean a thing to the customer. Try to winnow down your strategic statement to 35 words or less. This will allow the statement to be easily memorized, and kept top of mind among your employees. To encourage this at rms, we keep our statement posted all around our plant to remind everyone of what we’re doing, and how we’re doing it.

Finally, remember that this strategic statement should guide everything in your business, from your sales and marketing to your operational plan. If you have an effective strategy and implement it correctly, you will have a sustainable competitive advantage.

Define Your Ideal Customer
After you decide which markets you want to sell to in your strategic statement, you can take your strategic thinking one step further and define your ideal customer. To do so, consider the best customer you have today. What size are they? What is their strategy? What are their strengths and weaknesses? And perhaps most importantly, why are they buying from you? Knowing what kind of customer you most like to work with will allow you to be strategic when adding to your customer base.

When you figure out who your best customer is, it is often useful to also identify the characteristics of your worst customer by asking the same questions. This will help you identify potentially challenging customers early on, and may even prevent you from doing business with undesirable customers in the first place.

When you meet a new potential customer, you can ask another series of questions to determine whether it would be an appropriate customer for your business. I’ve found using an analysis called a Schrello Analysis is particularly useful. It asks three questions about a new product: Is it real? Can we make it? Is it worth making? This analysis is doubly useful when you ask the same questions about your potential customers. When rms locates a potential new customer, for example, we ask, are they and their product real? Can we make the product? And, is it worth it? A lot of money is invested in developing and working with new customers, so if you can use this modified Schrello Analysis, you will be able to identify which potential customers are the best and worst fit for your business.

Define Your Selling Process
Years ago, I was a marketing manager at another manufacturing company. On a mission to identify the company’s selling process, I sent out a survey to every product manager, marketing manager, representative and sales manager. I listed in the survey the steps that needed to be complete in order to have a successful sale at that company, then asked who was responsible for doing each of them. The results were telling. As it turned out, nobody understood who was doing what. I believe we had multiple people doing the same thing, and there were critical things that weren’t being done at all.

Over the next six months, the group restructured the selling process and laid out who had the primary responsibility for each step. If you haven’t done this, I encourage you to take a close look at your selling process. In your ideal world, how would a sale happen? What are the steps involved? Write down the process, and then ask your sales team who is responsible for each step, working with them to assign or reassign responsibility if necessary. A lot of steps may involve team effort, which is fine. The real key is to establish who does what. This will ensure accuracy and efficiency within your selling process, allowing your sales team to work smarter instead of harder.

H. Doug Plunkett is director of sales and marketing at rms Company, a medical device contract manufacturing company concentrating in the cardio/neuro stimulation and orthopaedic market segments. Plunkett has held various operations and marketing management positions at the company for 17 years. He has had over 25 years of experience in the contract manufacturing industry, including five years as the general manager of an orthopaedic implant company. He has a bachelor’s degree in engineering from Georgia Tech and a master’s degree in marketing from the University of Wisconsin-Madison.