HomeMarketingThe 5 Key Success Factors Of Business – No. 4: Marketing

The 5 Key Success Factors Of Business – No. 4: Marketing

This is the fourth in a series of posts on the 5 Key Success Factors of Business which can ensure your success and stand the test of time.

Business Success Book - Key Success FactorsToday we want to give insights into what the world’s best companies do regarding marketing – also called customer relations, sales and responsiveness. In addition to the information on this page, you can learn much more about the Marketing success factor in our new book, The Business Success Book: Secrets of Management, Marketing, and Other Key Success Factors to Boost Your Business, available in all formats at amazon using this link.

As a reminder, the 5 Key Success Factors are:

  • Strategic Focus (Leadership, Management, Planning)
  • People (Personnel, Staff, Learning, Development)
  • Operations (Processes, Work)
  • Marketing (Customer Relations, Sales, Responsiveness)
  • Finances (Assets, Facilities, Equipment)

What is Marketing?

The famous management guru Peter Drucker once made this important statement about marketing, which all too few business leaders appreciate:

      “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

      Whether you call this function marketing, selling, customer relations or external communications, this, importantly, is where the money comes from. That is why it is so important, and why we are giving it special attention in this book.

      Chances are, your business doesn’t have a multi-million-dollar budget for ads during half-time of the Super Bowl or for direct mail to households across the country. Your marketing budget is probably limited, and you want to – need to – get the best bang for your buck.

      There are plenty of websites and books which will give you thousands of small-to-midsize business marketing ideas and possibilities, but there are so many choices, it can be confusing to decide: Which approach is best for you? This chapter is designed to answer that question as concisely as possible.

Definition of Marketing

      First, we need to define what we are talking about. Back in the 1950s, marketing was defined in terms of the “4 P’s”:

  • Product (or service) which you provide for sale
  • Price, which you charge for your product or service
  • Place (or distribution), how and where you deliver your product or service to customers
  • Promotion, how you communicate what your product/service has to offer, including advertising, public relations, personal selling, internet marketing and more.

(Some industries add a 5th P, such as Packaging for the packaging industry, but the 4 P’s are fairly universal.)

      More recently, the American Marketing Association has defined marketing this way:

       “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

      Got that? What this means is, importantly, marketing is not just something that a marketing person does. Marketing is a function of the whole organization or “set of institutions,” or as we like to say in this book, part of a living system.

      Expanding on the AMA definition, first of all, you create value for customers in the form of products or services they want. Second, you communicate to these existing or potential customers that you have what they want. Third, you deliver the products or services to the paying customers. And long-term you manage relationships with customers in ways that benefit your organization and its stakeholders.

We also like this simple definition:

 “Marketing involves orienting the business to meet the needs of the customer.”

This is called the “marketing orientation” and has many benefits for any business. Again this stresses that it is a whole-organization function, with meeting the needs of the customer as its main focus. Now, how do we go about doing that?

The first constraint is, you’ve probably already decided what your business is. And your business is probably either what you like to do, what you want to do, or what your business is already doing. The problem with this is, maybe this is not what customers want to pay money for. The No. 1 reason that so many businesses fail, especially the newer ones, is that they do not offer products or services that enough people want to pay for!

Instead of focusing mainly on what you want to do or what you like, focus on what customers (markets) need – and some of those needs are constantly changing, especially in the fast-paced 21st Century.

      Now let’s turn to the 10 primary principles of the Marketing Success Factor:

1. Define Your Target Markets

      You may not run the best pizza bakery in America, but you could provide the best pizza bakery within a one-mile radius of your store. Marketers often use the term “market segmentation” to mean: define your target markets in segments such as location, demographics, values and more. The more specifically you can define your target markets, the better your chances of establishing a competitive advantage – something you naturally do better than your competition – that you can sustain over time. If someone wants a calamari pizza slathered in marinara sauce, you can be the dominator. A local lawyer in my market area focuses on serving motorcycle bikers – he is a biker himself – and he promotes it constantly with TV advertising.

      Don’t try to be all things to all people! That is a prescription for disaster. Segment your markets in a way that you can dominate. In many ways marketing boils down to four words: “Market segmentation” and “product differentiation.” This means your product (or service) is different from the competition in ways that appeal to your target market segments. Another little marketing axiom is, “Find a market small enough that you can dominate it.” Don’t aim for world domination until you find a way to be No. 1 in your neighborhood or city.

2. Monitor Customer Needs and Satisfaction

      Today’s customers are a fickle bunch. They want to try the food at each new restaurant, then soon abandon it for the next one. They buy a product or service because all their friends are hyping it on social media, then when the fad fades, so does the business. Think of customer needs as a constantly moving wave and learn to ride the wave like an expert surfer – slightly ahead of the curve. Again this is something the average business never does, and suffers the consequences.

      The ideal scenario is to find out what customers need and value before you start your business. This is highly recommended, for example, in developing a business plan as advocated by the Small Business Administration. But again almost no one does this. They launch a business based on what they like and assume other people will like it too.        So let’s assume your business is up and running, producing some kind of product or service, and you want to monitor customer needs, values and satisfaction. How would you do that? Here are some possibilities:

  • Hire a marketing consultant or market research company to conduct an objective survey of your customers and, if possible, potential customers. Find out their perceptions, needs, values (what’s important to them) and satisfaction with your business or other providers. This is the best approach if you can afford it.
  • Contact a local college or university that teaches marketing or business and see if there’s a class that would like to work with you to do a survey for free. It gives you valuable objective results and gives them real-world market research experience.
  • Set up an online survey using Survey Monkey, Google Forms or other free service. Email your customers (you do have your customers’ emails, don’t you?) and ask them to take the survey. Offer a drawing for a gift card or prize as a reward.
  • Mail a written survey to customers or prospects for whom you have addresses. Include a self-addressed, stamped or business reply envelope. Perhaps offer some prize or reward for participating.
  • Hand out a short survey to customers visiting your store or place of business. Ask them to fill it out, fold it in half, and turn it in before they leave for a discount coupon good for any future purchase.
  • Last is the old-fashioned approach where the owner or manager walks around (again easy for a restaurant or retail store) and asks customers how their experience is going and what can you do better. Emphasize your interest in suggestions for improvement and not just a generic “Everything’s fine” kind of answer. People may still tell you what they think you want to hear, but if you ask sincerely, you may get some valuable insights.

3. Build a Unique Brand Positioning

      This is very similar to our first Principle under Strategy, and an example of how all five success factors are interrelated: “Focus on what you do best, a sustainable competitive advantage.” If you do that, it is the job of marketing to build a unique brand positioning on this advantage. What does this mean?

      “Positioning” refers to how your brand is going to be perceived in relation to your competition. In their highly regarded book, Positioning: The Battle For Your Mind, Al Ries and Jack Trout claimed that your mind perceives products in terms of hierarchies or ladders. Coca-Cola and Pepsi have battled for the top rung on the ladder of dark cola for many decades. The Ford Mustang competes with the Chevy Camaro. And so on through every business category.

      So you have to stop and think, what category and particularly what hierarchy do you want to compete for? In simplest terms (real world is more complicated), companies compete on the bases of quality, price and service. There’s a famous saying – “Quality, price, service. Pick two.” This is because there are always trade-offs.

      Keep in mind that whatever positioning you choose to promote through marketing, it must be realistic. If you claim to be the low-cost provider and stick the customer with high prices, you will ruin your reputation. If you claim to provide excellent service, you’d better constantly monitor your competition to see what sort of service they provide so you can stay one step ahead.

      Positioning strategy is best communicated with a short, memorable marketing slogan or positioning statement. Like “15 minutes could save you 15 percent or more on car insurance” from GEICO; “I’m lovin’ it” from McDonalds, and “Always the low price. Always” from Walmart. This kind of positioning statement, stated creatively and repeated over and over, tends to sink into customers’ minds and influence their perceptions of your business. But it must be believable if it is going to stick.

4. Use Multiple Media for Target Marketing

      Over the years I learned that in almost every case, industry leader do more marketing communications than their competitors. Is all that marketing the cause of their top position or just something they can afford because they are the industry leader? Probably both.

      Now if you have a small business with limited income, you are not going to be able to afford a lot of advertising. But anyone can afford to use free social media to reach out to potential customers and attract them to buy from you. Your message must speak to their needs and not just be “we’re the best” chest-thumping. You can include promotions such as sale prices or limited-time availabilities. But there are many other options.

Manage your marketing mix – the 4 P’s.

For many years the marketing “mix” has been defined as a combination of the “4 P’s” of marketing. These are the four primary variables of your marketing strategy and implementation:

(a) Product – the products or services you will offer to customers for sale. As noted above, you must select products or services that fill a real need, in a niche small enough that you can dominate it. But beyond just selecting your product or service, other important success factors must be carefully managed. Probably most important is quality. You need to offer products of high quality that the customer can depend on time and time again. The quality must be consistent and must conform to the customer’s perceptions, not just yours. If you are in a service business – and even the act of selling products is a service – you must ensure that the whole customer experience is enjoyable. From the first point of contact with your business, through service delivery and the purchasing experience, and on to service or follow-up after the sale, every step needs to be carefully planned and managed (especially if you have employees) so the customer experiences pleasure and satisfaction at every step. Again, regular honest feedback from your customers is vital to keep this customer experience not only positive but also continuously improving.

(b) Price – the price you will charge for your products or services. The customer not only pays money for your stuff – he or she also pays in time and effort. And the customer will consider all that when deciding to buy again. How much time or effort did the customer expend to obtain your offering? What can you do to minimize the time and effort so the purchase is exceptionally convenient and positive? Think about the total experience and what you can do to continuously improve.

(c) Place – your place of business or how you deliver your products. Customers judge your business by your place of business or product distribution point even before they receive and use the product or service. Every little thing influences customer perceptions. In retail, not only is convenient location important, but also visibility from a main road, easy access in and out, and safety are all important factors in the consumer’s mind (sometimes unconsciously) as he or she buys from you or considers buying. The way your employees are dressed, the interior furnishings and lighting, air conditioning, smell – all the senses are working to develop a perception of your business, product and service. Attention to detail is vital.

(d) Promotion – communications with potential and existing customers. This is the part of marketing that most people think IS marketing, but now you see it is only a fraction of it. “If you build it, they will come” might work for a “Field of Dreams,” but it doesn’t work for a business of reality in most cases. It is possible for a new store or restaurant in a well-located and high-traffic shopping center to attract customers with just some nice signage and an appealing storefront. But even this kind of business, like all others, can benefit from some well-planned, creative, and well-executed promotion. This includes advertising, public relations, personal selling, Internet marketing and more.

5. Practice Strategic Selling and Tracking

      Strategic selling involves managing a long-term relationship with each customer, including his or her present and future needs, instead of traditional selling which focuses on making the sale in the moment. Each person or company you sell to represents what is called a lifetime customer value. For example, a restaurant customer might only spend $20 for a meal once, but if you can get the customer to come back often, over a number of years, the total lifetime customer value could easily be in the thousands of dollars. Keeping in touch with each customer via an email newsletter or periodic updates helps sustain and enhance each long-term customer relationship.

      You also need to make an effort to capture each customer’s name, email address and other contact information in a database, typically called a Customer Relationship Management (CRM) system. Some of these are available online for free. In addition to contact information, you can capture personal information such as family members, birthday, product or service preferences and more to help your business relate to each customer as a unique individual.

6. Manage Customer Expectations

Did you know that a customer’s perceptions of the product or service provided by your company are shaped by their expectations, which you can manage before and after the sale? This led to the saying, “It is better to underpromise and overdeliver than to overpromise and underdeliver.” Tell a customer that their job can be finished or their product delivered in two weeks, then provide it in one week, and you will have a happy customer. Tell the customer they can expect delivery in three days, then provide it in one week, and they will be disappointed.
      Many people in business have “the need to please disease.” This leads them to tell customers what they think they want to hear so they can get the sale, then deal with the dissatisfaction later on. It’s often a case of short-term pleasure followed by long-term pain.  

As Abe Lincoln famously said, “You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” So as you seek to manage customer expectations and perceptions, honesty is the best policy. Decide what level of quality, price and service you can realistically sustain and tell customers what to expect. Then deliver exactly what you promised. Of course if a problem occurs like a delayed part over which you have no control, again keep the customer informed so that there is not a disappointing experience down the road.

7.    Keep Customers Well Informed

      Some services like haircuts and grocery checkouts happen before your eyes, so you don’t need the company to keep you informed during that time. But many other services and some product businesses do work that the customer cannot see but has to pay for. That’s when it’s especially valuable to keep customers informed in language they understand.

      For example, a custom chemical manufacturing company charges many thousands of dollars to make a certain chemical compound for its customers. The customer expects the output to meet its requirements exactly, on time and on budget. So it is vitally important that the chemical company provide the customer with regular updates in language they can understand – not chemical jargon.

      Or consider a pharmacy refilling a prescription. Walgreens does an excellent job of keeping customers informed via text message and sometimes telephone when a prescription is being refilled, needs to be refilled, or there are any delays. If the information is too technical for a text message, they tell the customer to call their pharmacy for an explanation.

      Many of us have had the experience of hiring a home repair or remodeling contractor, who starts the job with a flurry, then disappears, providing no explanation of why they did not continue. Sometimes the reason is a missing part, and sometimes the contractor is working multiple jobs at once and doesn’t want the customer to know that. Whatever the reason, customers want to be kept informed in language they understand – no deception.

      Just because the customer wants to know what is going on with their job doesn’t mean they don’t trust you – they are only human and have a need to know. Besides, they are the one paying the bill, so they deserve to know!

8. Encourage and Share Customer Feedback

      Big companies like Amazon and other online retailers automatically send “how did we do” emails to customers as soon as the product is delivered. Now the situation is reversed from No. 7 above and instead of the customer needing to know what they can’t observe, the company needs to know what they can’t observe. They have computerized reports stating the product was delivered, but were you the customer satisfied? Did it arrive in good condition in the right place as you specified? Do you have any questions or feedback you want to provide?

      For big companies, this kind of data is a part of their internal business processes. The information is gathered electronically and distributed to everyone involved so they can “keep score” and strive for continuous improvement.

      Even a small business like a hotel or restaurant can provide customers with feedback cards to share their experiences. Or at least once a year ask customers to fill out a short online survey (keep it under 5 minutes for best results) so you have some objective feedback to guide your operations and strategy.          

9. Develop a Proprietary Interaction Process

      Most people have never knowingly experienced a proprietary interaction process or even know what the term means.

      If you have ever stayed at a Ritz Carlton Hotel, you know. Ritz Carlton is famous for bending over backwards to satisfy customers, even at their own expense. Each employee is empowered to spend up to $2,000 to satisfy each customer. For example, one customer got home and discovered they had left their laptop charger in their room. By the time they contacted the hotel, they discovered that Ritz Carlton had already sent them the charger overnight via FedEx.

      Zappos, the online shoe retailer, is known for accepting customer returns, no questions asked, even if the customer has used or abused the shoes.

      And Nordstrom also empowers all its personnel to go the extra mile to take care of customers. One time, a Nordstrom employee noticed that a customer left their luggage and flight itinerary in the parking lot of the store. The employee got into their own car and drove the customer’s luggage to the airport and found her before her flight took off.

  In all of these cases, customers are wowed by the extraordinary service and become quite loyal as a result. As noted previously, consider the lifetime value of each customer and not just the income from one transaction.

      What can your business do to develop and maintain a proprietary interaction process? Think about it. Every contact with a customer including the first phone call or email is an opportunity to make an impression that “we are different and we really care about our customers.” But all team members must be trained in this process if it is to be maintained and believable.

10. Monitor Competitor Moves and Trends

      Earlier we spoke of how living systems in the natural world constantly adapt to the changing environment so they can survive and thrive. The same applies to businesses.

      In his massive PIMS study (which stands for Profit Impact of Market Strategy), Bradley Gale discovered that customer buying choices are always relative to the perceived value offered by competitors. So you may be thinking your customers are loyal and will always buy from you, then along comes a competitor offering superior value (basically a desirable combination of quality, price and service), and suddenly your income drops. Walmart destroyed thousands of small-town businesses by offering local residents products of equal or better quality at much lower prices.

      If you run a retail business and a competitor moves into your neighborhood, shop them like a customer would to experience what they have to offer. No matter what kind of business you have, you can “shop the competition” by doing an online search for terms that combine your business category and market area, such as “insurance agency Omaha” or “auto repair Miami.” Check out their websites and be sure your site is competitive. And if possible shop the competitors by buying their products or services or at least meeting with them for a quote. If you are afraid of revealing your identity, hire a “mystery shopper” through a local service or hire a part-timer for the purpose.

      Market trends can be monitored online as well. Many industry sectors have free email newsletters to track trends. You might benefit from joining a trade association for your business category and attending seminars on the latest trends. Or hire a service or freelancer to track trends for you and provide you with reports.

      A free alternative is to set up a Google alert to monitor any search term of your choosing and deliver results to you via email regularly.

      Don’t keep your head in the sand or your nose on the grindstone. Look around and see what is going on in the marketplace. Adapt quickly to stay ahead of the competition, survive and thrive.

How does your company stack up with these marketing-management criteria? Think about it. In our next post, we’ll take a quick but penetrating look at the Finances success factor. Meanwhile, be sure to get all the details now about the Marketing success factor in our new Business Success Book on Amazon at this link.

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